The UAE’s non-oil private sector showed strong growth in December 2025, although the pace of expansion moderated slightly compared to the previous month, according to the latest S&P Global Purchasing Managers’ Index (PMI) survey. The PMI fell to 54.2 in December, just below November’s high of 54.8 but still well above the neutral 50.0 level, indicating continued expansion in the sector.
While output growth remained among the fastest recorded in 2025, rising input costs and pressures on balance sheets highlighted some of the challenges businesses faced towards the year’s end.
Non-oil sector growth in the UAE
The UAE’s non-oil private sector ended 2025 with solid growth, though December saw a slight dip in the pace of expansion. The S&P Global PMI survey indicated that demand remained robust, though the rate of new orders slowed marginally, from 57.8 in November to 57.2 in December.
Despite the moderation in growth, the non-oil sector’s performance in 2025 was strong overall, marking a year of consistent business activity and expansion, with output growth being particularly significant.
Cost pressures affect growth
One of the key challenges in December was the acceleration of cost pressures. Input costs, which had already been rising sharply throughout the year, increased at the fastest rate in 15 months, driven by higher wages and material prices. These rising costs impacted profitability, and many firms adopted leaner inventory strategies to manage expenses.
The ongoing cost pressures also contributed to a buildup in backlogs of work, marking the highest backlog in 10 months, as administrative delays and rising demand combined to create a strain on production schedules.
Future expectations remain positive
Despite the increased costs and backlog concerns, future business expectations remain optimistic. However, the level of optimism has softened due to worries about market saturation and continued cost pressures. Firms remain hopeful that the UAE’s non-oil sector will continue to grow, but there is cautious anticipation as businesses adjust to the challenges in the global economy.
In Dubai, the UAE’s business hub, the PMI slightly dipped to 54.3 in December, from 54.5 in the previous months, but output levels surged at the fastest pace since March 2024, highlighting the city’s continued resilience and business activity.
