Business activity in the UAE’s non-oil private sector improved in August, with the S&P Global Purchasing Managers’ Index rising to 53.3 from 52.9 in July. The index stayed above the 50.0 threshold, signalling expansion in operating conditions.
The upturn was driven by stronger output, which rose at the fastest rate in six months, supported by ongoing project work and growth in local demand. However, total new orders increased at the slowest pace since June 2021, with firms citing competitive pressures and supply chain difficulties. Supplier performance showed only marginal improvement, the weakest in nearly four years.
Companies reduced input purchases for the first time in more than four years, leading to a fall in inventories. While purchase price inflation eased, wage pressures accelerated, producing the steepest rise in average costs since February. Businesses raised selling prices at a quicker pace, reflecting higher labour costs.
In Dubai, the local PMI rose slightly to 53.6 from 53.5 in July, marking the strongest output growth in seven months. Firms reported higher sales and project activity, though order book growth moderated. Delivery times lengthened for the first time since March 2024, and inventories contracted at the fastest rate in more than a year. Wage growth remained the main driver of cost increases, pushing selling prices higher for the ninth consecutive month.
S&P Global noted that while confidence improved, output growth is increasingly reliant on backlogs of work as demand momentum weakens.
