Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
The UAE’s non-oil private sector remained firmly in expansionary territory in July, with the seasonally adjusted S&P Global UAE Purchasing Managers’ Index rising to 52.7 from 50.8 in June, supported by easing regional tensions and increased customer spending.
“The UAE’s non-oil private sector saw its strongest improvement in four months in July, as the PMI recovered strongly from June’s over five-year low,” the report said.
The PMI is a key indicator of business conditions in the manufacturing and services sectors. A reading above 50 signals expansion, while a reading below 50 indicates contraction.
New-order growth accelerated to its fastest pace since February as surveyed companies reported a gradual recovery in customer confidence following an easing of regional tensions. Domestic infrastructure projects also provided additional stimulus to business activity.
For the first time since March, non-oil companies received increased inflows of export work. “The rise in export sales was modest, yet the fastest seen in a year,” the report said.
Companies increased output as outstanding business accumulated at the strongest rate in four months, reflecting stronger demand as well as supply constraints caused by freight congestion.
Employment returned to growth in July after workforce levels recorded their steepest fall in nearly six years in June. Companies cited stronger demand as a reason for renewed hiring.
Purchasing activity also increased at a robust pace. However, inventory levels contracted at their fastest rate since December 2025, partly because of continued delays to imported deliveries and shortages of materials.
Input-cost inflation remained sharp and moved closer to the recent peak recorded in April. About 10% of surveyed companies reported higher prices for fuel, food, fertilisers, software and shipping.
Staff costs also rose at their fastest pace since February, although the increase remained marginal.
Companies raised their selling prices in response to higher costs, but the increase was modest as competition continued to limit their pricing power. Some firms said tighter supplies, combined with stronger demand, allowed them to increase prices.
July’s data provided some relief for UAE companies after the PMI fell close to the neutral 50 level in June, David Owen, Principal Economist at S&P Global Market Intelligence, said.
“Although the July PMI reading of 52.7 remains a step lower than the levels observed prior to the Middle East conflict, it provided some assurance that businesses were coping better after a heavily disrupted second quarter,” Owen said.
However, he said the volatile situation in the Strait of Hormuz continued to create uncertainty and keep price pressures elevated.
“Firms struggled to fully pass on increased costs to customers amid a competitive business environment,” Owen said.
Dubai PMI
The Dubai PMI rose to 51.7 in July from 50.7 in June, mainly driven by a rebound in new-business growth.
Improving customer demand led to the sharpest increase in new orders since March.
Firms recorded a solid increase in input costs, prompting a moderate rise in selling prices. Hiring activity recovered following the first decline in workforce numbers in 15 months in June.
