The UAE’s non-oil private sector returned to hiring in July as stronger demand and improving business conditions supported a recovery in activity, although companies continued to face elevated costs and supply-chain pressures.
The seasonally adjusted UAE Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 52.7 in July from 50.8 in June, marking the strongest improvement in business conditions in four months. A reading above 50 indicates expansion.
The recovery was supported by stronger customer demand, easing regional tensions and increased client spending. New order growth accelerated to its fastest pace since February, while domestic infrastructure projects provided additional support.
Export sales also returned to growth for the first time since March. While the increase remained modest, it was the strongest recorded in a year, with surveyed companies linking the improvement to stronger regional activity.
UAE companies resume hiring
The improvement in demand translated into a recovery in employment. UAE non-oil companies increased workforce numbers in July after cutting jobs in June, when employment declined at its fastest pace in nearly six years.
Businesses attributed the renewed hiring to stronger demand, while output growth also accelerated during the month.
Outstanding workloads rose at their fastest pace in four months as customer demand increased and freight congestion continued to disrupt supply chains, suggesting that companies were facing higher workloads even as they expanded their workforce.
David Owen, Principal Economist at S&P Global Market Intelligence, said the July figures provided some relief after the PMI had moved close to the 50-point mark in June.
He said smoother trade flows and improving customer confidence had helped support the recovery, although the index remained below levels recorded before the regional disruption.
Input and staffing costs remain elevated
The improvement in activity came alongside continued cost pressures. Input price inflation remained sharp, with companies reporting higher expenses for fuel, food, fertilisers, software and shipping.
Staff costs also increased, reaching their fastest rate since February, although the rise was described as marginal.
Businesses raised their selling prices again in July, but the pace of inflation remained mild as competition limited companies’ ability to pass higher costs on to customers.
Purchasing activity increased strongly, while inventories fell at their fastest rate since December 2025. S&P Global attributed part of the decline to delays in imported deliveries and shortages of some materials.
Supplier delivery times improved modestly as shipping movements through the Strait of Hormuz became smoother, although the improvement was weaker than in June.
Despite the stronger July performance, business confidence remained subdued. Only 7% of surveyed companies expected output to increase over the next 12 months, highlighting continued uncertainty and competitive pressures.
Dubai hiring also returns to growth
Dubai’s non-oil private sector also recorded an improvement in July, with the PMI rising to 51.7 from 50.7 in June.
The increase was driven by a rebound in customer demand, with new orders growing at their fastest pace since March.
Companies also resumed hiring after reducing workforce numbers in June.
Business activity continued to expand, although growth remained slower than historical averages as companies faced ongoing cost and competitive pressures.
Firms reported a solid increase in input costs, which contributed to a moderate rise in selling prices.
The July data point to a tentative recovery in the UAE’s non-oil economy, with stronger orders and renewed hiring offering some relief after the slowdown seen in June. However, persistent cost pressures, supply-chain constraints and weak business confidence suggest companies remain cautious about the pace of expansion.