Business activity across the UAE’s non-oil private sector closed 2025 on a strong footing, underlining the economy’s resilience and breadth as firms continued to benefit from firm demand, supportive government policies and sustained domestic and international interest.
The latest Purchasing Managers’ Index data from S&P Global point to an expansion that, while slightly softer than November’s peak, remained among the fastest recorded during the year and signals positive momentum heading into 2026.
The seasonally adjusted S&P Global UAE Purchasing Managers’ Index stood at 54.2 in December, easing from a nine-month high of 54.8 in November but closely aligned with its long-run average of 54.3. Readings above the 50 mark indicate expansion, and December’s figure confirms a robust improvement in operating conditions across the non-oil economy. More than a quarter of surveyed companies reported month-on-month increases in output, while fewer than 7 per cent recorded a decline, highlighting the broad-based nature of the upturn.
Firms attributed higher activity levels to stronger inflows of new orders, improving market conditions and favourable domestic policies. Rising customer numbers, expanding tourism flows and steady demand from overseas markets continued to support growth, reinforcing the UAE’s position as a regional hub for trade, services and logistics. The pace of output growth, though marginally lower than in November, ranked among the strongest seen throughout 2025, suggesting that the non-oil sector ended the year with considerable underlying strength.
This performance aligns with broader economic assessments from official and international institutions. The UAE Central Bank has consistently highlighted the non-oil sector as the primary engine of growth, supported by diversification strategies, infrastructure investment and reforms aimed at improving the business environment. The International Monetary Fund and World Bank have similarly noted that non-hydrocarbon activities such as tourism, transport, financial services and construction are increasingly driving overall economic expansion, reducing dependence on oil revenues.
However, the December survey also pointed to emerging pressures beneath the headline growth figures. Input costs rose at the sharpest rate in 15 months, reflecting higher salary expenses as well as increased transport and maintenance costs. These rising expenses squeezed margins, prompting firms to adopt more cautious strategies around hiring and inventory management. Employment growth remained modest at the end of the fourth quarter, slower than in November, even as demand continued to rise.
Inventory levels fell sharply, recording one of the steepest declines in the survey’s history despite a solid rise in purchasing activity. Many companies reported deliberately running leaner stocks, using newly delivered inputs to meet existing orders rather than building inventories, a strategy aimed at managing costs and preserving cash flow.
Price pressures were passed on cautiously to customers. Selling prices rose for the sixth consecutive month, but increases remained modest, indicating that competitive conditions limited firms’ ability to fully offset higher costs.
Dubai’s non-oil economy mirrored the national picture. The emirate’s PMI registered 54.3 in December, signalling a solid upturn only slightly below the recent highs seen in October and November. Output across Dubai increased at the fastest pace since March 2024, driven by a marked uplift in new business intakes.
Companies expanded activity despite only marginal increases in staffing and a further drawdown in inventories, which fell at the steepest rate since April 2020. Input price pressures intensified, pushing output prices higher, though mark-ups remained contained.
David Owen, senior economist at S&P Global Market Intelligence, said firms finished the year with two of its best months of activity growth, as the survey data suggested that sales were rising much faster compared to its low point in August. “Firms took encouragement from signs of increased customer spending, rising tourism, greater technology adoption and supportive government policies.”
Business expectations across the UAE remain generally positive in 2026, though confidence has softened compared with earlier periods and is among the lowest seen in nearly three years. Firms continue to express optimism about demand trends, tourism, technology adoption and investment, but some caution that market saturation and cost pressures could limit the pace of growth.
