The UAE’s non-oil private sector recorded its fastest growth in nearly two years in August, leading a broader recovery in Gulf business activity after disruption from the regional conflict.
The UAE Purchasing Managers’ Index (PMI) rose to 55.3 in August, up from 52.7 in July, according to S&P Global. The latest reading marked the second consecutive monthly increase and the strongest expansion since December 2024.
A PMI reading above 50 signals growth, while a reading below 50 indicates contraction.
UAE non-oil sector gains momentum
The UAE’s recovery was supported by stronger sales, rising new business and renewed stock building. Companies also reported improving customer activity as economic caution eased.
Price pressures weakened at the same time. This gave businesses more room to respond to stronger demand.
David Owen, principal economist at S&P Global Market Intelligence, said the UAE’s non-oil economy had moved into a stronger phase.
“The UAE’s non-oil economy has shifted decisively into a higher gear,” Owen said.
Business expectations for the next 12 months also improved in August. Sentiment reached its highest level since April.
Construction activity and expectations of easing regional tensions supported the more positive outlook.
Saudi Arabia sees steady private-sector growth
Saudi Arabia’s non-oil private sector also strengthened in August, although growth remained below its long-term trend.
The PMI rose to 53.8, compared with 53.1 in July. The reading marked the fifth consecutive month of expansion and the highest growth rate in six months.
New orders increased for the fifth month in a row. However, international orders fell sharply, showing that external demand remains a challenge for Saudi exporters.
Business confidence improved as well. Expectations for the year ahead reached a seven-month high.
Riyad Bank Chief Economist Naif Al-Ghaith said continued government support and development projects would remain important for private-sector activity.
“Continued fiscal support and the pipeline of development projects remain important anchors for private sector activity,” Al-Ghaith said.
Kuwait recovery gathers pace
Kuwait also recorded stronger private-sector activity in August.
The country’s non-oil PMI climbed to 53.6, up from 50.8 in July. Output and new orders posted their fastest increases since February.
Employment also rose for the first time in six months.
Companies reported greater confidence in the economic outlook. However, S&P Global noted that activity had not yet returned to the levels seen before the regional disruption.
Andrew Harker, economics director at S&P Global Market Intelligence, said the recovery outlook had become more positive.
“The picture certainly looks more promising midway through the third quarter of the year,” Harker said.
Egypt moves closer to stabilisation
Egypt’s non-oil private sector came close to stabilisation in August after seven months of contraction.
The PMI rose to 49.6 from 46.8 in July, reaching its highest level in seven months. A reading below 50 still indicates contraction, but the latest figure points to a much smaller decline in business activity.
Despite the improvement, companies continued to face pressure from material shortages and liquidity concerns. These challenges led businesses to reduce purchasing activity.
Inflationary pressures also increased after easing in June and July.
Employment growth strengthened, reaching its second-fastest pace since the survey began more than 15 years ago. The increase came as companies worked through backlogs built up over the previous three months.
Business confidence improved sharply, with expectations reaching their highest level in more than four years.
Gulf recovery remains uneven
The August PMI data point to a broad improvement in private-sector activity across the region. However, the pace of recovery differs between markets.
The UAE recorded the strongest expansion among the markets covered, while Saudi Arabia and Kuwait also posted growth. Egypt, meanwhile, moved closer to stabilisation but remained in contraction.
The figures suggest that stronger domestic demand, government-backed projects and improved business confidence are supporting the regional recovery.
However, external demand, supply constraints and inflation remain key risks. Companies will continue to watch regional developments closely as the Gulf economy moves through the third quarter.
