Growth in the UAE’s non-oil private sector strengthened in July, with business conditions improving at the fastest pace in four months as new orders rose and companies resumed hiring, according to S&P Global.
The seasonally adjusted UAE Purchasing Managers’ Index increased to 52.7 in July, from an over five-year low of 50.8 in June. A reading above 50 indicates an improvement in business conditions.
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S&P Global said the recovery reflected stronger customer demand, easing regional tensions and increased client spending. New order growth reached its fastest pace since February, while domestic infrastructure projects provided additional support.
Export sales also returned to growth for the first time since March. Although the increase was modest, it was the strongest recorded in a year and was linked by surveyed companies to improving regional activity.
Employment returns to growth
UAE non-oil companies increased workforce numbers in July after cutting jobs in June, when employment declined at the fastest pace in nearly six years.
Firms said stronger demand supported renewed hiring. Output growth also accelerated, while outstanding workloads accumulated at the strongest rate in four months as customer demand increased and freight congestion continued to affect supply chains.
David Owen, Principal Economist at S&P Global Market Intelligence, said the July figures offered some relief after the PMI moved close to the 50-point threshold in June.
He said smoother trade flows and improving customer confidence had supported a recovery in growth, although the index remained below levels recorded before the regional disruption.
Costs remain elevated
Despite the improvement in activity, companies continued to face higher input costs and supply-chain pressures.
Input price inflation remained sharp, with businesses reporting higher costs for fuel, food, fertilisers, software and shipping. Staff expenses also increased at the fastest pace since February, although the rise was marginal.
Businesses increased their selling prices again, but the pace of inflation remained mild because competition limited their ability to pass on higher costs.
Purchasing activity rose strongly, while inventories declined at the fastest rate since December 2025. S&P Global linked the fall in stocks partly to imported delivery delays and shortages of some materials.
Delivery times improved modestly, helped by smoother shipping movements through the Strait of Hormuz, although the improvement was weaker than in June.
Only 7 per cent of surveyed firms expected output to increase over the coming 12 months, reflecting continued uncertainty and competitive pressure.
In Dubai, the PMI rose to 51.7 in July, from 50.7 in June, driven by a rebound in customer demand. New orders increased at the fastest pace since March, while companies also resumed hiring after a decline in June.
Business activity continued to expand, although at a slower rate than historically recorded, as competitive and cost pressures remained evident. Firms also reported a solid rise in input costs, leading to a moderate increase in selling prices.
Source: Khaleej Times