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Growth in the UAE’s non-oil private sector expanded in December at its fastest rate in nine months on robust demand conditions, a business survey revealed on Monday.
The seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI) rose to 55.4 in December from 54.2 in the previous month, marking its third consecutive monthly increase.
Survey respondents said the buoyant market conditions helped them to secure new clients and larger order book volumes. The overall rise in new work was the sharpest recorded for nine months, despite a softer upturn in sales to international clients. “Higher demand, projects in progress, discounted prices and favourable weather conditions were all supportive of business activity, according to qualitative reports,” the survey showed.
However, staffing levels grew at one of the slowest rates in over two-and-a-half years, in part linked to margin pressures.
"Capacity levels remain under considerable stress however, illustrated by another marked increase in backlogs of work. Recruitment appears to be the limiting factor - the pace of employment growth was barely changed from November's 31-month low. While margin constraints appear to be holding some firms back from recruiting more staff, as charges fell despite rising costs, there is certainly a need to boost resources to ensure firms capitalise on demand in the new year, David Owen, Senior Economist at S&P Global Market Intelligence.
Looking ahead, firms expressed optimism towards the year-ahead though with the level of confidence ticking down for the second month running. Notably, optimism was at its second-lowest since early 2023 (ahead of September 2024), the report said.
Dubai PMI
The Dubai PMI rose from 53.9 in November to 55.5 in December, signaling the strongest growth of operating conditions in nine months. The growth was underpinned by faster expansions in output and new orders, as businesses commented on increased client demand and busy markets. In both cases, rates of growth were stronger than those observed at the UAE level.
Dubai-based firms expressed weaker optimism towards the coming year, with confidence dropping to its lowest level since May 2021. Just 6% of respondents expect output to grow in 2025.
(Writing by Brinda Darasha; editing by Seban Scaria)
