UAE non-oil businesses recorded their strongest improvement in business conditions since December 2024. Stronger orders, higher output, and rising exports supported the latest expansion. At the same time, easing cost pressures gave companies additional room to grow. The latest business survey showed a sharp improvement across the private sector during August. The results also pointed to stronger confidence among companies about future demand.
The seasonally adjusted Purchasing Managers’ Index climbed to 55.3 in August. The index stood at 52.7 during July. A reading above 50 signals improving business conditions. Therefore, the latest figure indicates a clear acceleration in private sector activity. It also marked the second consecutive month of faster growth. Businesses reported stronger customer demand and increased activity across several areas of the economy.
New business also recorded one of its fastest increases in more than two years. Companies reported stronger customer activity during August. Meanwhile, lower economic uncertainty helped support demand. Export orders also increased for a second consecutive month. This improvement followed a period of declining export demand during the second quarter. As a result, companies experienced stronger order books and improved sales opportunities.
Output growth also gained momentum during the month. Business activity reached its strongest expansion in six months. Companies linked the improvement to stronger order books and ongoing projects. They also pointed to growing demand for digital services. In addition, fewer logistics problems helped businesses complete work more efficiently. These factors combined to support stronger production across the non-oil economy.
The improvement in business activity also encouraged companies to strengthen their supply chains. Many businesses increasingly turned toward domestic suppliers during August. This strategy helped companies reduce their exposure to international disruptions. It also helped shorten delivery times and improve purchasing activity. Furthermore, stronger local sourcing gave businesses greater confidence in maintaining stable operations.
Companies also increased their inventories at the fastest pace in almost three years. The buildup suggests that businesses expect demand to remain strong. It also shows that companies want greater protection against possible supply disruptions. Therefore, businesses appear increasingly prepared for future orders and production requirements. Higher inventory levels could also help companies respond more quickly to changes in customer demand.
Supply conditions improved during the month as well. This improvement helped reduce pressure on input costs. Input cost inflation reached its lowest level since February. However, some companies still reported higher expenses for several key materials. These included energy, fuel, cement, steel, and chemicals. Nevertheless, overall cost pressures became less intense compared with previous months.
The stronger performance also extended to Dubai’s non-oil private sector. Dubai’s business activity improved significantly during August. The city’s PMI increased to 54.1 from 51.7 in July. Companies reported stronger client spending and improved export activity. Output and new orders also reached their highest growth levels in six months. These figures point to broader momentum within Dubai’s business community.
UAE non-oil companies also became more optimistic about the coming year. Business expectations reached their highest level since April. Stronger sales trends contributed to the improvement in confidence. Construction activity also supported positive expectations among businesses. Meanwhile, companies expressed hopes for calmer conditions across the region. Greater stability could provide additional support for investment and business planning.
The latest figures highlight the continued strength of the UAE’s diversified economy. Non-oil industries remain an important source of business activity and employment. Strong domestic demand continues to support companies across multiple sectors. At the same time, rising exports are creating additional opportunities for businesses. Improved supply conditions could further strengthen this momentum in coming months.
The August results also show how businesses have adapted to changing economic conditions. Companies have adjusted their supply chains and increased local sourcing. They have also expanded inventories to prepare for future demand. At the same time, businesses continue investing in digital services and ongoing projects. These actions could help maintain growth even if external risks remain.
Overall, UAE non-oil businesses entered September with stronger momentum. New orders increased, while output reached a six-month high. Export demand also continued recovering after a difficult second quarter. Meanwhile, easing cost pressures provided additional support for businesses. Improved confidence could encourage companies to increase investment and hiring. The latest data therefore points to a more resilient and increasingly optimistic private sector.
