The UAE’s non-oil private sector recorded its strongest improvement in four months during July, as the seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) climbed to 52.7 from 50.8 in June. The June reading had previously marked the lowest level for the index in more than five years, making the July recovery a significant indicator of stabilizing business conditions.
This moderate improvement was largely supported by easing regional tensions, stronger customer spending, and demand linked to domestic infrastructure projects. New orders grew at their fastest pace since February, while export orders increased for the first time since March, representing the quickest expansion in international business for a year.
Businesses reported a gradual recovery in customer confidence throughout July, although tight client budgets and intense market competition continued to limit demand for some firms. Outstanding work accumulated at the strongest rate in four months, reflecting both increased customer demand and ongoing supply constraints caused by freight congestion.
In response to the uptick in activity, companies increased output, with the rate of growth accelerating slightly during the month, though it remains below the historical average. Employment levels also returned to growth after companies reported their steepest reduction in workforce numbers in nearly six years during June. Businesses that recruited additional staff in July largely attributed the decision to stronger demand.
Despite these gains, confidence regarding future output weakened for the third consecutive month, falling to its lowest level since March. Only 7% of surveyed firms expected their output to increase over the coming year. “Still, the volatile situation in the Strait of Hormuz continues to make the future uncertain and kept price pressures elevated in July, which firms struggled to fully pass on to customers amid a competitive business environment,” said David Owen, Principal Economist at S&P Global Market Intelligence.
Owen further noted that firms saw a reduction in inventories despite a sharp rise in purchasing, suggesting they are operating with tighter stock volumes and longer supply schedules. UAE businesses increased their purchases of raw materials and other inputs at a robust rate in July, but inventory levels contracted at their fastest pace since December 2025, with companies linking the decline to continuing delays in imported deliveries and material shortages.
Input cost inflation remained elevated, moving closer to the peak recorded in April. Approximately 10% of companies reported paying more for fuel, food, fertilisers, software, and shipping. While staff costs increased at their fastest pace since February, the overall rise remained marginal. Businesses raised their selling prices again during July, but the increase was mild as intense competition restricted their ability to pass higher costs to customers.
In Dubai, the PMI increased to 51.7 in July from 50.7 in June, primarily driven by a recovery in new business. Companies reported the strongest increase in new orders since March as customer demand improved. Business activity continued to expand, although the rate of growth was the weakest recorded since June 2021 due to price pressures and competition. Hiring in Dubai recovered slightly after companies reduced employee numbers in June for the first time in 15 months.
Broader aviation and infrastructure trends remain a point of focus for the region, with the UAE currently holding 57% of Boeing orders in the Middle East. Meanwhile, the global aerospace sector continues to see major activity, including Philippine Airlines moving to acquire over 14 Airbus A350s, Riyadh Air adding six more Airbus A350 jets at the Farnborough Airshow, and Airbus securing a $10 billion jet order from SAS.
Riyadh Air adds 6 more Airbus A350 jets at Farnborough
Delivery times improved modestly, partly because of smoother shipping movements through the Strait of Hormuz, although the improvement was weaker than in June.
Source: Gulf News
