Today's Edition
A.SREENIVASA REDDY (ABU DHABI)
The non-oil private sector of the UAE’s economy continued its robust expansion in January with the seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) standing at 55.0. It is slightly lower than nine-month high of 55.4 recorded in December, but firmly above 50.0 mark, indicating solid expansion.
PMI is an economic indicator that measures the business activity in the manufacturing and services sectors. It is based on surveys of company executives and reflects trends in new orders, production, employment, supplier deliveries, and inventory levels. A PMI above 50 indicates expansion, while below 50 signals contraction.
The latest PMI survey data confirms strong growth in the UAE’s non-oil economy at the beginning of 2025. “Business activity and new orders continued to rise sharply, driven by favourable market conditions and softening cost pressures,” the S&P Global PMI report said.
Just over a quarter of surveyed firms saw activity levels improve at the start of the year, the PMI report said adding businesses also reported a persistently sharp rise in sales volumes. The uplift in demand was mainly domestic-driven, as growth in new export orders nearly stalled, the report noted.
Non-oil businesses benefited from a moderation of price pressures. “Average cost burdens rose at their slowest rate for 13 months, despite evidence of higher costs for transport and machinery, and a quicker rise in salaries,” the S&P PMI report noted.
The slowdown in inflation helped firms to increase their purchases of inputs. Healthy market conditions and good client relationships led to a quickening of delivery times. “Inputs were generally used to service existing orders rather than building up inventories,” the report said.
“The UAE PMI signalled another good month for the non-oil private sector in January. Robust expansions in activity and new business, as well as lower input cost inflation, suggest the economy is in a healthy position,” said David Owen, Senior Economist at S&P Global Market Intelligence.
Firms reported only a mild increase in staff numbers in January, although the pace of growth was the fastest since August 2024. The rate of backlog accumulation accelerated to its fastest for eight months. With demand pressures strong, non-oil companies opted to raise their selling prices in January, marking the first increase in four months, the PMI report said.
Reacting to the latest PMI data, Samer Mardini, Chief Investment Officer at Yorklyn Asset Management in Dubai, said: “The January PMI report indicates that the UAE’s non-oil sector is off to a strong start in 2025. With a PMI of 55.0, growth remains solid, driven by strong domestic demand.”
This impressive growth is fuelled by a remarkable surge in new business inflows.
Notably, the easing of cost pressures has allowed businesses to increase purchases and improve delivery times. “Companies have also raised prices for the first time in four months, reflecting strong demand,” Mardini added.
“The UAE has successfully created a highly favourable business environment. Its strategic location, combined with recent investments in digital infrastructure, has positioned it as a prime destination for investors,” said Vijay Valecha, Chief Investment Officer at Century Financial.
The latest PMI data is even more impressive given the slowing pace of the global economy, Valecha noted.
“The UAE’s population grew by 385,000 in 2024, as recorded by Worldometers, leading to a sharp rise in activity and improved market conditions,” Valecha said, adding that the growth was primarily driven by domestic demand, while new export orders have remained steady.
Dubai PMI
Business conditions in Dubai’s non-oil private sector showed a sharp improvement in January. The headline PMI registered 55.3, falling only slightly from December's nine-month high of 55.5, but remaining above the UAE reading of 55.0.
Total activity expanded markedly in response to greater new business inflows, as survey panellists highlighted favourable market conditions as well as improvements in sales. Cost pressures also eased, with the pace of input price inflation slipping to a three-month low.
