UAE’s Non-Oil Sector Shows Consistent Growth Despite Regional Challenges

The United Arab Emirates’ non-oil economy continues to demonstrate solid momentum, with the latest data showing consistent expansion driven by business activity, employment growth, and robust demand in key sectors.

According to S&P Global’s latest Purchasing Managers’ Index (PMI) report, the UAE's non-oil PMI rose to 53.5 in June 2025, up from 52.9 in May, signaling sustained growth in private sector output and new orders. A reading above 50 indicates expansion.

Growth Drivers

The increase was attributed to improved domestic demand, particularly in the construction, real estate, retail, and hospitality sectors. Surveyed firms reported a steady rise in backlogged work, which has in turn led to increased hiring across the board.

“The UAE’s non-oil economy is showing resilience and diversification strength, with businesses reporting improved order volumes, especially from the local market,” said David Owen, Senior Economist at S&P Global Market Intelligence.

The UAE’s push toward economic diversification, supported by initiatives under ‘We the UAE 2031’ and free zone reforms, has contributed to building investor confidence and attracting foreign businesses.

Resilient Despite Regional Pressures

While broader geopolitical tensions and uncertain global trade dynamics have weighed on sentiment across the region, UAE firms remain optimistic. The PMI report noted that businesses continue to project growth in output over the next 12 months, despite a slight slowdown in new export orders.

“There are some pressures from regional uncertainty, but overall, firms are adapting well and capitalizing on local demand,” the report added.

Employment and Inventory Expansion

June data also reflected a rise in employment levels, as companies hired more staff to meet delivery schedules. Purchasing activity also increased, as businesses built up inventories in anticipation of future orders.

The overall cost burden rose only modestly, allowing firms to maintain competitive pricing without significantly increasing output charges.

Outlook

Economists see the UAE’s non-oil sector as a key pillar for long-term economic sustainability. The government’s continued investment in infrastructure, trade liberalization, and innovation ecosystems is expected to support this upward trajectory.

With Dubai and Abu Dhabi serving as regional hubs for business, logistics, and tourism, the UAE is well-positioned to maintain its growth momentum throughout the second half of 2025.

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