DUBAI: The UAE non-oil economy driven by the private sector is racing ahead, with business activity in December 2024 expanding at its fastest pace in nine months, fueled by surging domestic demand and robust market conditions, a business survey revealed on Monday.
The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) climbed to 55.4 in December, up from 54.2 in November, marking the third consecutive monthly rise.
Companies reported securing new clients and expanding their order books at the sharpest rate in nearly a year, thanks to favorable market dynamics and project activity.
“Higher demand, ongoing projects, competitive pricing, and pleasant weather provided a perfect storm for growth,” the report stated. However, the hiring momentum failed to keep pace, with staffing levels inching up at one of the slowest rates in two-and-a-half years, constrained by tight margins and cautious recruitment.
Backlogs build amid rising demand
While businesses scrambled to fulfill the influx of orders, capacity constraints became evident. Backlogs of work grew sharply, with firms pointing to recruitment limitations as a key bottleneck. “Margin pressures, including rising costs and falling charges, are holding companies back from boosting their workforce,” said David Owen, Senior Economist at S&P Global Market Intelligence.
Despite the upbeat growth in activity, business confidence for the year ahead remains muted. Optimism in the UAE dropped to its second-lowest level since early 2023, reflecting concerns about sustaining momentum amid competitive pressures.
Confidence falters
In Dubai, business conditions showed even stronger growth, with the local PMI rising to 55.5 in December, up from 53.9 in November. Faster expansions in output and new orders drove the surge, as businesses cited bustling markets and rising client demand.
However, optimism among Dubai firms hit its lowest level since May 2021, with only 6 per cent of respondents expecting output to grow in 2025.
