The United Arab Emirates posted a robust surge in non-oil business activity in December, with the UAE’s Purchasing Managers’ Index climbing to 55.4, the strongest nine-month reading, up from 54.2 in November. The momentum underscores continued expansion in the non-oil private sector, driven by solid demand conditions across manufacturing, tourism, technology, and other key industries. The development aligns with the country’s ongoing diversification push under Vision 2031, which prioritizes expanding the non-oil economy to sustain long-term growth and resilience. In parallel, Dubai’s private sector also ended the year on a high note, while other GCC economies showed divergent but broadly positive trajectories, despite some pockets of weakness and inflationary pressures. The December PMI readings collectively paint a picture of a region steadily transitioning away from oil dependence toward a more diversified, investment-driven growth model, even as firms navigate capacity strain, staffing challenges, and rising costs.
UAE’s Non-Oil Growth: PMI at a Nine-Month High and What It Means for 2025
The UAE’s overall PMI performance for December pointed to continued expansion across the non-oil private sector, reinforcing the sense of persistent momentum carried through the final month of the year. Readings above 50 indicate growth, while any figure below this threshold signals contraction; December’s 55.4 places the UAE in a strong expansionary territory, signaling healthy demand conditions and robust market activity. The PMI’s ascent from 54.2 in November reflects not only ongoing recovery but also improved confidence among business leaders about the near-term horizon. The latest data corroborate a pattern of sustained growth throughout 2024, effectively closing the year with a sense of resilience and a positive outlook for 2025. This pattern, analysts say, underscores the success of diversification efforts across the non-oil landscape and supports the premise that the UAE remains on track toward broader economic diversification.
In commentary accompanying the release, analysts highlighted the persistent strength of demand as the principal driver of the December expansion. The non-oil private sector benefited from buoyant conditions in which clients remained active and forward orders remained elevated, supporting an overall uptrend in output and new business intake. Business sentiment, while positive, also showed signs of cautious calibration as firms anticipated the path ahead. The expansionary momentum suggests that the UAE’s non-oil industries—ranging from manufacturing to technology-enabled services and tourism-related activities—are continuing to gain traction, aided by supportive policy measures, infrastructure investments, and a competitive business environment. The sustained demand environment is particularly important for long-term capacity-building and for creating a broader base of economic activity beyond energy exports.
However, the December PMI also highlighted structural constraints that could shape hiring and production decisions in the coming months. Capacity pressures remained evident, with backlogs of work rising and signaling that supply chains and production capacity were operating near full tilt. The pace of employment growth was subdued, registering as one of the slower increases in more than two and a half years, a signal that while demand is strong, firms are proceeding with caution on labor expansion. This pattern points to a tight labor market in the UAE’s non-oil sector, where firms are balancing the need to fulfill backlogs with disciplined recruitment strategies amid a challenging hiring climate. The commentary from the PMI release emphasized that recruitment remains a limiting factor, restraining the full utilization of rising workloads.
Cost dynamics featured prominently in the December data. Input costs increased during the month, but the rate of inflation eased to its softest pace since March, suggesting a more favorable cost environment compared with earlier in the year. Despite rising workloads, margins remained under pressure as firms navigated the dual challenges of higher costs and the need to maintain price competitiveness in a competitive market. The combination of rising input costs and margin pressures acted as a moderating influence on staff expansion, contributing to a reluctance among firms to accelerate hiring even as business volumes climbed. This nuanced cost backdrop is critical for understanding the trajectory of the UAE’s non-oil sector as it moves through the early stages of 2025.
Optimism for future growth in the UAE’s non-oil sector ticked down slightly for the second consecutive month, reflecting a tempered outlook amidst persistent macroeconomic uncertainties. While sentiment remains positive overall, the decline suggests that firms are monitoring global demand conditions, exchange rate fluctuations, and domestic policy developments as they calibrate expansion plans. The December data imply a steadier, more deliberate pace of growth rather than an acceleration, with businesses prioritizing efficiency, capacity management, and sustainable expansion over aggressive hiring or abrupt scale-ups. This nuanced outlook aligns with an economy navigating a transition from rapid post-pandemic recovery to a more mature phase of growth that emphasizes productivity gains and structural diversification.
Dubai’s PMI registered a nine-month high, rising to 55.5 in December from 53.9 in the prior month, signaling that the emirate’s private sector continued to outpace national averages in terms of expansion pace. Dubai saw faster growth in both output and new orders, indicating stronger client demand and busier market conditions. In contrast to the UAE-wide picture, the Emirate’s performance was notably stronger on several fronts, underscoring its role as a regional hub for trade, tourism, and high-value services. The data suggest that Dubai’s non-oil economy sustained momentum through the year-end period, reinforcing its status as a leading barometer for the UAE’s broader non-oil growth story. Yet, the Dubai PMI also carried a caveat: optimism for 2025 among Dubai’s non-oil firms weakened to its lowest level since May 2021, with only a small share of respondents (around 6%) forecasting output growth in 2025. This juxtaposition—strong current expansion with cautious near-term expectations—highlights a nuanced outlook for Dubai as firms weigh near-term conditions against longer-term growth prospects.
Across the UAE, the December readings underscore a broader message about diversification success and the resilience of non-oil industries. The performance is framed as evidence of the country’s progress in realizing the Vision 2031 agenda—expanding manufacturing, promoting tourism and technology-enabled sectors, and building an economy less dependent on crude oil revenues. S&P Global’s assessment highlighted that the UAE’s expansion in December represented the best performance in nine months, reinforcing confidence that the non-oil private sector is well-positioned to contribute to sustainable growth in 2025. The broader implication for policymakers and investors is clear: with demand fundamentals intact and a constructive cost environment, the non-oil economy remains a critical engine for growth and diversification in the UAE.
Within this broader UAE narrative, the Dubai-specific expansion underscores the emirate’s distinctive dynamics and its role as a growth accelerator for the national economy. The stronger performance in Dubai compared with the UAE-wide picture reflects its status as a diversified, globally connected market with a high concentration of services, trade, and tourism-driven activities. Yet, a measured optimism prevails with regard to 2025, as a small portion of firms in Dubai remain cautious about expansion plans. The concurrent strength in Dubai and the UAE at large indicates a synchronized, cross-territory momentum that can support a more resilient non-oil expansion path, aided by ongoing diversification efforts, competitive business environment, and targeted policy measures designed to sustain demand in the year ahead.
From a policy perspective, the December PMI signals that the UAE’s non-oil growth engine remains robust but requires careful management of labor market dynamics and cost pressures. The backlogs, in particular, point to a need for strategic investments in productivity-enhancing technologies, logistics efficiency, and capital formation to alleviate capacity constraints. Stakeholders also expect that continued investment in tourism, hospitality, and high-value manufacturing will help broaden the base of demand and create a more balanced growth trajectory. The UAE’s authorities, in coordinating with business leaders, will likely prioritize policies that sustain demand while addressing structural bottlenecks in the labor market and supply chains. The December PMI thus serves as both a confirmation of the current expansion and a call to push ahead with structural reforms that support long-term non-oil growth and job creation across sectors.
Subsection: Capacity, Employment, and Sector-Specific Signals
The December readings make clear that capacity levels remained under pressure, as indicated by higher backlogs of work, signaling that current demand was outpacing available capacity in several non-oil sectors. This pattern suggests that firms will need to invest in capacity expansion, automation, and productivity improvements to sustain growth without compromising margins. Employment growth, while positive, moved at a slower pace than demand and registered among the slowest increases in more than two-and-a-half years. The slower hiring rate points to a cautious approach by employers, who are balancing the need to meet rising workloads with considerations about wage pressures, global labor markets, and the potential impact on profitability. The staffing constraint is a critical factor in shaping the UAE’s near-term growth trajectory, with implications for output, delivery times, and customer satisfaction as orders rise.
In parallel, input costs rose in December, but inflation eased to its softest pace since March, suggesting a more favorable cost environment for firms compared with later periods. The softer inflation print assists in stabilizing margins and preserving competitiveness in a market where firms face a mix of higher raw material costs and the need to price to maintain demand. Despite the softer inflation, the rise in input costs remains a factor that firms must manage through pricing discipline and efficiency gains. The interplay between higher input costs and moderated inflation creates a nuanced environment in which firms can, with the right mix of productivity improvements and selective investment, sustain growth while protecting margins. The overall cost picture thus remains a key variable to monitor for guidance on hiring, investment, and pricing strategies in the UAE’s non-oil sector.
Dubai’s Private Sector: A Closer Look at the Nine-Month High
Dubai’s nine-month high PMI reading of 55.5 in December signals a stronger expansion pace relative to the UAE average and highlights the emirate’s unique role in the region’s growth dynamic. The faster growth in output and new orders underscores Dubai’s status as a magnet for global business activity, particularly in trade, logistics, tourism, and value-added services. The buoyant demand environment aligns with Dubai’s ongoing development agenda and its emphasis on attracting investment in high-growth sectors. The emirate’s PMI performance is a testament to the favorable business climate, supportive infrastructure, and strategic positioning that together create a powerful platform for non-oil growth. Yet, the optimism for Dubai’s 2025 expansion remains nuanced, with a notably lower share of firms expecting output growth next year. This indicates that while Dubai’s current expansion remains robust, firms are exercising caution as they weigh macroeconomic uncertainties and potential shifts in global demand patterns.
Broader GCC Momentum: Saudi Arabia, Kuwait, and Regional Trends
The December PMI readings across the Gulf Cooperation Council region show a mix of strong momentum and localized challenges, reflecting a broader diversification narrative that extends beyond the UAE. In Saudi Arabia, the PMI rose to 58.4 in December, driven by a sharp increase in new orders. The Kingdom’s PMI has stayed above the neutral 50 mark since September 2020, underscoring sustained expansion in its non-oil private sector. The persistent expansion in Saudi Arabia points to a resilient demand environment, with rising orders and output signaling confidence among firms about the growth path in the near term. The Saudi performance corroborates the GCC trend of strengthening non-oil activity and highlights the role of structural reforms, investment in diversified industries, and an improving business climate as engines of growth. The PMI data for Saudi Arabia suggest that the Kingdom’s non-oil industries continue to perform well, reinforcing the region’s broader trajectory toward diversification and increased resilience to oil price volatility.
In contrast, Egypt’s PMI softened, dipping to 48.1 in December from 49.2 in November, signaling a sharper contraction in private sector activity. The contraction was broad-based, with subdued client demand contributing to the steepest decline in output across the construction, wholesale, and retail sectors. The services sector remained relatively stable compared with manufacturing and trade, benefiting from a steadier flow of new business. The decline in activity occurred in a context of broader macroeconomic headwinds, including a deteriorating Egyptian pound against the dollar and higher prices, which weighed on demand and operating conditions. Analysts noted that the non-oil private sector’s expected recovery in 2025 might face setbacks due to currency pressures and inflationary dynamics. The downturn in Egypt’s private sector underscores the heterogeneity of regional performance and the need for targeted policy measures to support growth, stabilize the currency, and ease cost pressures for firms across key sectors.
Kuwait’s non-oil PMI presented a contrasting but still positive picture with a December reading of 54.1, marginally down from 55.9 in November but remaining well above the 50 threshold that separates expansion from contraction. The reading signaled solid improvement in business conditions and marked the third-strongest PMI reading since September 2018, highlighting a sustained expansion in Kuwait’s non-energy sector. The survey noted a continued rapid increase in new orders in December, supported by advertising, competitive pricing, and the positive effects of events such as visitors arriving for the Arabian Gulf Cup. Companies in Kuwait also reported a further uptick in employment for the third consecutive month, though the pace of hiring remained marginal, signaling cautious optimism about labor market expansion in the face of rising workloads. Optimism about business conditions for the next year remained strong among survey participants, with expectations of improved economic conditions driving sentiment. The data suggest that Kuwait’s non-oil economy remains on a solid growth trajectory, aided by a mix of demand drivers and favorable external and domestic conditions.
The GCC region’s performance in December further reinforces the overall shift away from oil dependency toward diversified growth models that emphasize manufacturing, technology, tourism, and services. The positive PMI signals in the UAE, Saudi Arabia, and Kuwait reflect a broader trend of increased demand, resilient output, and a willingness among firms to invest in capacity and capabilities to capture growth opportunities. The region’s diversification push is helping to cushion economies from oil-market volatility, supporting more stable long-term trajectories for employment, investment, and consumer sentiment across the Gulf.
Egypt’s PMI: Contraction Signals Caution for 2025
In sharp contrast to the Gulf’s growth momentum, Egypt’s private sector contracted in December as measured by the PMI, signaling potential headwinds for 2025. The December PMI reading of 48.1 indicated a contraction in private sector activity, with the biggest declines concentrated in construction, wholesale, and retail sectors. The contraction reflects subdued client demand, leading to reduced output and a tighter operating environment for Egyptian firms. The services sector stood out as comparatively more stable, benefiting from a steadier flow of new business in a market otherwise characterized by softness in manufacturing and trade-related activities. The overall outcome points to a challenging near-term environment for Egypt’s non-oil private sector as it navigates macroeconomic tensions and sector-specific headwinds.
Analysts highlighted that the anticipated recovery in Egypt’s non-oil private sector could face notable challenges in 2025. The depreciation of the Egyptian pound against the US dollar, with the currency breaching important thresholds in early December, contributed to higher prices and weakened demand, exacerbating margins and squeezing profitability. The downturn prompted firms to resist passing on rising costs through higher charges, as they sought to protect orders in a price-competitive environment. The combination of currency pressures, inflation, and cooling demand contributed to the fastest decline in operating conditions since the previous April. Despite the negative trajectory, there were signs of cautious optimism toward year-end, with some firms expressing improved sentiment about domestic and geopolitical conditions in 2025. The overarching message is that inflationary concerns, currency depreciation, and demand softness together will shape Egypt’s non-oil private sector performance in the near term, necessitating policy responses to stabilize prices, support investment, and foster faster recovery in the mid-term.
The Egyptian private sector’s mixed performance underscores the divergent conditions within the GCC region, where neighbor nations have enjoyed varied but generally positive momentum. Egypt’s experience serves as a reminder that macroeconomic stabilization and structural reforms remain critical to unlocking a durable recovery, particularly in sectors most affected by demand volatility, exchange-rate dynamics, and input cost pressures. The December PMI results will likely influence policy debates within Egypt about how best to balance price stability with growth, while ensuring that exporters and manufacturers retain competitiveness in a high-cost environment. As with the broader region, the performance of Egypt’s non-oil private sector in 2025 will hinge on currency stabilization efforts, inflation containment, and continued investment in productivity-enhancing measures that can support a more resilient expansion path.
Kuwait’s Non-Oil Momentum in December: Employment, Orders, and Optimism
Kuwait’s December PMI reading of 54.1 reaffirms a steady non-oil expansion, albeit with a softer edge than the month before. The reading suggests solid improvements in business conditions, supported by a further rapid increase in new orders and ongoing growth in output. The December data indicate that Kuwait’s non-energy sector maintained a robust pace of expansion, consistent with the region’s broader diversification objectives and the positive spillovers from regional demand. The PMI’s signal of continued growth in Kuwait aligns with expectations that the non-oil framework would sustain momentum into the new year, particularly as advertising campaigns and competitive pricing strategies continued to stimulate demand and market activity.
Within Kuwait, firms increased employment for the third consecutive month in response to rising workloads, though the pace of hiring remained modest. Hiring remained only marginal in December, reflecting cautious optimism among employers about the ability to scale labor resources in 2025. The survey highlighted a sense of confidence about business conditions for the coming year, driven by anticipated improvements in economic conditions and the continued flow of orders. Participants suggested that the growth engines embedded in Kuwait’s private sector—such as efficiency improvements, strategic pricing, and the value added by tourism-related activities—would help sustain momentum into 2025. The overall outlook among survey respondents pointed to continued progress in the non-oil economy, with firms hopeful that the regional growth environment would support hiring and investment in the near term.
The December Kuwait PMI also pointed to the important role of external events and regional tourism in shaping business confidence. In particular, the Arabian Gulf Cup and related visitor traffic furnished a stimulus to demand for services, hospitality, and retail, contributing to the positive performance in December. This dynamic underscores how regional events can lift activity in the non-oil sector by stimulating consumer spending, discretionary services, and hospitality-related industries. While the December data show a broader strength in Kuwait’s non-oil private sector, survey participants noted that employment growth would need to pick up more decisively to sustain a stronger pace of expansion in 2025. Nonetheless, the overall sentiment remained positive, with firms expecting improvements in economic conditions throughout the coming year and a willingness to hire as demand strengthens.
Implications for Policy, Investment, and the GCC’s Diversification Path
Taken together, the December PMI results illuminate a regional evolution toward a more resilient, diversified growth model across the GCC. The UAE’s nine-month high reading reinforces Vision 2031’s core objective: to expand the non-oil economy, foster manufacturing and technology-driven growth, and promote tourism and services to build sustainable output beyond energy revenues. The Dubai reading, with its higher growth rates in output and new orders, demonstrates how large urban hubs can accelerate diversification by attracting investment, enabling export-oriented manufacturing, and supporting service-sector expansion. The broader implication is that targeted policy support—ranging from infrastructure investment to business-friendly regulatory environments—can enable non-oil sectors to scale up and contribute more meaningfully to GDP.
For Saudi Arabia, the elevated PMI reading underscores the Kingdom’s ongoing success in cultivating a diversified non-oil economy. The sustained expansion reflects a favorable demand environment, rising orders, and a positive outlook for the sector’s growth potential. Saudi Arabia’s experience provides a regional case study in how structural reforms and strategic investments in high-growth sectors can yield durable gains in non-oil activity, supporting employment and investment and reducing reliance on oil revenues. The Kuwait reading likewise demonstrates resilience in the non-oil economy, with continued gains in new orders and output and a stable employment picture. Kuwait’s experience highlights the importance of maintaining a supportive macroeconomic framework and a steady pipeline of opportunities—both domestic and international—that can sustain non-oil growth across cycles.
Egypt’s contraction, however, signals the complex and uneven nature of regional diversification. While some GCC economies benefit from steady demand and currency stability, Egypt faces currency pressures, inflation risks, and a softer demand backdrop, which can restrict the speed and scale of private-sector recovery. The December PMI readings for Egypt suggest that policy measures aimed at stabilizing the currency, containing inflation, and fostering a supportive business environment are critical to enabling a more robust non-oil recovery in 2025. The divergence within the region underscores the need for country-specific policy tools that address currency dynamics, price stability, and competitiveness, while leveraging the broader regional momentum toward diversification.
In the policy and investment realm, the December PMI data offer a clear signal to policymakers and business leaders: sustaining momentum in diversification requires continued investment in human capital, technology, and infrastructure, as well as prudent management of costs and supply chains. The data emphasize the importance of labor-market reforms and productivity enhancements to accommodate rising demand without triggering unsustainable wage pressures or margins. For firms, the message is to balance growth ambitions with prudent risk management, ensuring that hiring and capital expenditure align with realistic demand projections and the ability to integrate new capacity efficiently. In the UAE and broader GCC, the alignment of demand growth with a supportive policy environment can help realize the long-term objective of a resilient non-oil economy characterized by higher value-added sectors and sustainable job creation.
Outlook: Navigating 2025 with Diversification as a Core Theme
Looking ahead to 2025, the December PMI readings suggest that the GCC region will continue to navigate a path of diversification with a cautious but constructive growth outlook. The UAE’s non-oil sector appears well-positioned to sustain expansion, supported by strategic investments, a favorable business climate, and ongoing efforts to broaden the base of economic activity beyond energy. The UAE’s focus on manufacturing, tourism, and technology-driven services, embedded in Vision 2031, is likely to continue attracting investment and supporting job creation in the medium term, even as firms manage costs and capacity constraints. Dubai’s momentum indicates that urban centers will remain engines of growth, while national policies will need to address the structural bottlenecks that could constrain the pace of hiring and capacity expansion.
In Saudi Arabia, the PMI signal reinforces confidence that the non-oil private sector will continue contributing to growth through higher output, orders, and investment. The Kingdom’s growth trajectory, driven by economic diversification and a robust investment climate, will likely support a steady expansion in non-oil activities and employment in 2025. Kuwait’s continuing expansion signals that the non-oil sector remains a vital engine of growth, particularly as events such as regional tournaments and tourism-related activity sustain demand. Egypt’s struggle underscores the importance of currency stability, inflation control, and targeted reforms to unlock a stronger recovery in 2025, with the private sector’s performance closely tied to macroeconomic policy and external dynamics.
The region’s overall development trajectory will be shaped by how policymakers and the private sector respond to evolving demand patterns, supply-chain pressures, and cost dynamics. The December PMI data reinforce the central narrative of diversification as a driver of resilience: non-oil activity is expanding, demand remains firm in several segments, and the long-term outlook remains positive, albeit with sector-specific challenges that require nuanced policy responses. As the GCC economies push forward with reforms and investment in high-value industries, the role of innovation, productivity, and human capital will be critical in translating PMI-driven momentum into sustainable, inclusive growth across the region.
Conclusion
The December PMI landscape reveals a region transitioning toward a more diversified and resilient growth model, with the UAE leading the charge in non-oil expansion and Dubai amplifying the momentum. The UAE’s 55.4 PMI reading marks nine months of expansion and signals a stable demand environment for the year ahead, supported by improved cost conditions and cautious yet positive hiring trends. Dubai’s higher PMI and momentum in output and orders highlight the emirate’s pivotal role in regional growth, even as firms temper their near-term optimism about 2025. Across Saudi Arabia and Kuwait, the non-oil sectors continued to expand, propelled by new orders and output growth, while Egypt faced a contraction that underscores currency and inflation risks that will need targeted policy attention in 2025. The divergence within Egypt, and the contrasting positive trajectories across the Gulf economies, collectively underscore the region’s broader diversification narrative and the centrality of policy coordination, investment, and productivity to sustaining growth beyond oil.
Ultimately, the December PMI results illuminate a landscape where diversification strategies are bearing fruit, even as headline performance is uneven across countries and sectors. The momentum in the UAE, Saudi Arabia, and Kuwait demonstrates the tangible benefits of investing in non-oil industries and fostering environments conducive to innovation, tourism, and manufacturing. For policymakers, business leaders, and investors, the month’s data offer a clear signal: continue to prioritize diversification, address labor-market bottlenecks and cost pressures, and sustain investment in capacity, technology, and human capital to translate demand into durable, long-term growth. The coming year will test the region’s ability to manage inflation, currency stability, and global demand while leveraging the foundations laid by Vision 2031 and related diversification initiatives to build a more resilient, dynamic economy for the Gulf.
