UAE’s job market showed continued strength in July as companies across the non-oil economy expanded recruitment activity, even while facing higher operating expenses and increasing cost pressures.
UAE Employment Growth Continues as Non-Oil Businesses Increase Hiring in July Despite Rising Expenses.
UAE companies saw the fastest rise in new orders in five months, with hiring returning to positive territory and export sales achieving their strongest growth in 12 months.
The UAE’s non-oil private sector showed renewed signs of strength in July, with business activity improving at a faster pace compared with previous months, according to the latest data released by S&P Global. The survey indicated that companies operating outside the oil sector experienced a stronger business environment, supported by rising customer demand, improved market conditions, and a return to employment growth.
The improvement marks a recovery from the weaker performance recorded in June, when business activity reached its lowest level in more than five years. In July, firms reported better operating conditions as new orders increased and companies became more confident about expanding their workforce.
The seasonally adjusted UAE Purchasing Managers’ Index (PMI), a key indicator used to measure the health of the private sector economy, climbed to 52.7 in July compared with 50.8 in June. A PMI reading above 50 generally indicates that business conditions are improving, while a figure below that level points towards a slowdown.
The latest increase suggests that the non-oil economy regained momentum after facing slower growth in the previous month. Businesses surveyed by S&P Global reported stronger demand conditions, which helped drive improvements in sales activity and encouraged companies to increase hiring.
S&P Global said the recovery was supported by several positive factors, including stronger customer interest, reduced concerns linked to regional uncertainties, and higher spending from clients. These developments helped businesses experience improved confidence and greater activity during the month.
One of the main contributors to the improvement was the rise in new orders. Companies reported that demand from customers increased at the fastest pace since February, indicating a stronger flow of incoming business compared with recent months.
The increase in new orders reflects improved activity across different areas of the non-oil economy, as businesses benefited from greater client engagement and stronger spending patterns. Higher demand encouraged companies to expand operations and prepare for additional business opportunities.
Domestic projects, particularly infrastructure-related developments, also played an important role in supporting economic activity. Survey responses indicated that ongoing infrastructure work within the UAE provided additional momentum for businesses and helped strengthen demand conditions.
The improvement in infrastructure activity highlights the continued importance of domestic investment in supporting non-oil growth. Construction, services, and related industries have benefited from ongoing projects, contributing to wider economic activity beyond the energy sector.
Export performance also showed signs of recovery during July. After experiencing declines in previous months, export sales returned to growth for the first time since March. Although the increase was described as modest, it represented the strongest improvement in export activity recorded over the past year.
Companies surveyed linked the rise in exports to improving conditions across regional markets. Increased business activity in surrounding markets helped support demand for UAE-based companies and contributed to the recovery in international sales.
The return of export growth is seen as a positive development for businesses that depend on regional and international customers. While domestic demand remains a major driver of the UAE economy, stronger external demand provides additional support for companies operating across multiple markets.
Employment conditions also improved during July, with companies returning to hiring after a period of slower workforce activity. The resumption of job growth suggests that businesses became more willing to increase staffing levels as new orders and workloads improved.
The increase in employment reflects greater confidence among private sector companies. As demand strengthens, businesses often require additional employees to manage higher workloads, improve services, and support future expansion plans.
The latest PMI figures indicate that the UAE’s non-oil economy continues to show resilience despite facing challenges from higher operating costs and changing global conditions. Businesses have managed to maintain growth by benefiting from strong domestic demand, improving regional activity, and continued investment.
However, companies continued to experience cost pressures during July. Rising expenses remained a challenge for many businesses, affecting profitability and operational decisions. Despite these pressures, firms were able to maintain growth momentum and increase activity.
The combination of stronger demand and improved business confidence helped offset some of the challenges caused by higher costs. Companies focused on expanding sales, securing new customers, and improving efficiency to support continued growth.
The PMI data provides an important indication of the direction of the UAE’s non-oil private sector, which includes industries such as construction, services, manufacturing, and trade. The sector has become a key part of the country’s economic diversification strategy.
The July improvement follows a period of slower growth, showing that businesses are adapting to changing conditions and responding to renewed demand. The rise in the PMI suggests that the private sector remains capable of maintaining expansion despite external uncertainties.
Economists closely monitor PMI figures because they provide early insights into business activity before official economic data is released. Movements in new orders, employment, exports, and costs help indicate whether companies are preparing for expansion or facing difficulties.
The latest survey results suggest that businesses entered the second half of the year with stronger momentum. Rising orders, recovering exports, and renewed hiring indicate improved confidence among private sector companies.
Regional stability also contributed to better business sentiment. According to S&P Global, easing tensions in the region helped improve market confidence and supported stronger commercial activity during July.
Businesses also reported increased spending from customers, which contributed to the improvement in sales performance. Higher client expenditure supported demand across different industries and encouraged companies to increase their activity levels.
The UAE government’s continued focus on economic diversification, infrastructure development, and private sector growth has also supported the resilience of non-oil industries. These efforts have helped create conditions that allow businesses to expand beyond traditional energy-related activities.
Looking ahead, companies will continue to monitor demand trends, cost pressures, and regional developments. While challenges remain, the July PMI results indicate that the UAE non-oil economy has regained some momentum and is positioned for continued growth.
Overall, the latest S&P Global survey highlights a positive shift in the UAE’s private sector performance. With new orders accelerating, employment returning to growth, and exports showing improvement, businesses appear to be entering a stronger phase after the slowdown seen earlier in the year.
Employment returns to growth
The UAE’s non-oil private sector saw a positive shift in employment trends during July, with companies increasing their workforce after reducing staff numbers in the previous month. The latest business survey showed that firms returned to hiring as demand conditions improved and overall activity gained strength.
The recovery in employment followed a challenging period in June, when businesses recorded their fastest decline in job numbers in almost six years. However, as customer demand improved in July, companies became more willing to expand their teams and bring in additional employees to support higher workloads.
Businesses surveyed by S&P Global said the improvement in demand played a major role in encouraging recruitment. As new orders increased and activity levels strengthened, companies adjusted their staffing levels to meet rising operational requirements.
Alongside stronger hiring activity, overall output growth also accelerated during July. Companies reported that business activity expanded at a faster pace compared with the previous month, reflecting improved market conditions and stronger customer engagement.
Firms also experienced an increase in unfinished work, with outstanding workloads rising at the quickest rate in four months. The buildup of pending orders was linked to stronger customer demand as well as continued challenges affecting supply chains and delivery schedules.
Although companies were receiving more orders, some businesses faced difficulties completing work immediately because of ongoing logistics issues. Freight delays and supply-chain disruptions continued to affect the movement of certain goods and materials, creating pressure on companies to manage growing workloads.
David Owen, Principal Economist at S&P Global Market Intelligence, said the latest PMI results represented a welcome improvement after the weaker performance recorded in June. He noted that the index had moved close to the 50-point mark during the previous month, indicating a period of slower growth.
According to Owen, the recovery in July was supported by smoother trade conditions and improving confidence among customers. Better movement of goods and stronger demand helped businesses regain momentum after facing challenges linked to regional disruptions.
However, he pointed out that despite the improvement, business activity remained below the levels seen before the period of regional disruption. This suggests that while companies are recovering, some uncertainty and pressure continue to influence the pace of growth.
Cost pressures remain a challenge
Despite stronger activity and improving demand, businesses continued to face elevated operating costs during July. Companies reported that expenses related to materials, transportation, and other inputs remained high, creating pressure on profit margins.
Input price inflation remained significant, with businesses highlighting increases in several areas, including fuel, food products, agricultural materials, technology-related services, and shipping expenses. These higher costs continued to affect companies across different parts of the non-oil economy.
Staff-related expenses also increased during the month. Companies reported that wages and employment costs rose at the fastest pace since February, although the increase was described as relatively limited compared with other cost pressures.
The rise in labour costs reflects stronger hiring activity and continued efforts by companies to attract and retain employees. As demand improves, businesses often face increased competition for skilled workers, which can contribute to higher employment expenses.
While companies experienced rising costs, they remained cautious about increasing prices for customers. Businesses raised their selling prices again in July, but the increase was modest as competitive market conditions limited their ability to transfer higher expenses fully to clients.
The pressure to maintain competitive pricing meant that many firms absorbed part of the additional costs rather than passing them completely on to customers. This helped keep selling price inflation relatively controlled despite continued increases in input expenses.
Purchasing activity among businesses strengthened during July as companies responded to improving demand. Firms increased their buying activity to support higher production levels and manage growing customer requirements.
However, inventory levels declined during the month, recording the fastest reduction since December 2025. According to S&P Global, the decrease in stocks was partly linked to delays in receiving imported goods and shortages of certain materials.
Supply-chain difficulties continued to influence business operations, although conditions showed some signs of improvement. Companies reported that delivery times became slightly better during July as shipping activity became smoother.
The improvement in supply movement was partly linked to more stable shipping conditions through the Strait of Hormuz. However, the pace of improvement was weaker compared with June, indicating that logistics challenges had not fully disappeared.
Businesses continued to monitor supply risks closely as international transportation conditions remained uncertain. Delays in receiving materials can affect production schedules, increase costs, and create difficulties for companies trying to meet customer demand.
Despite the stronger business environment, company confidence about future growth remained limited. Only around 7 per cent of surveyed businesses expected their output levels to increase over the next 12 months.
The cautious outlook reflected several concerns, including continued uncertainty, strong competition, and pressure on costs. While current conditions improved, many companies remained careful about making long-term expansion plans.
Dubai’s private sector also showed improvement during July, with its PMI rising to 51.7 compared with 50.7 in June. The increase reflected stronger customer demand and improved business conditions across the emirate.
Companies in Dubai reported that new orders increased at the fastest pace since March, indicating a recovery in demand after the slowdown seen earlier. The improvement encouraged businesses to increase activity and restart hiring after reducing employment levels in June.
Business activity in Dubai continued to expand, although growth remained slower compared with stronger historical performance. Companies said that competitive pressures and rising expenses continued to affect their operations.
Similar to the wider UAE economy, Dubai businesses faced higher input costs during July. Rising expenses for materials, services, and other operational requirements contributed to increased cost pressures across the private sector.
As costs increased, businesses implemented moderate price adjustments for customers. However, competitive conditions prevented companies from making significant increases, resulting in only a limited rise in selling prices.
The latest data indicates that the UAE’s non-oil economy is showing signs of recovery after a period of weaker activity. Improved demand, renewed hiring, and stronger output growth suggest that businesses are regaining confidence.
At the same time, companies continue to face challenges from high costs, supply-chain disruptions, and uncertain market conditions. These factors are influencing business decisions and limiting the speed of recovery.
The July PMI results highlight the balance between improving economic activity and ongoing operational pressures. While companies benefited from stronger customer demand and better trade conditions, they continued to navigate higher expenses and competitive challenges.
Economists consider PMI data an important indicator of private-sector performance because it provides early insights into trends such as employment, production, new orders, prices, and business confidence.
The latest figures suggest that the UAE non-oil sector entered the second half of the year with improved momentum. Businesses are responding to stronger demand, rebuilding workforce numbers, and increasing purchasing activity to support growth.
However, continued monitoring of inflation, supply conditions, and customer demand will remain important in determining how quickly the sector can return to stronger expansion levels.
Overall, July’s performance reflects a recovery in business activity across the UAE’s non-oil economy. Companies showed renewed confidence through increased hiring and stronger output, while still managing the challenges created by elevated costs and ongoing supply-chain pressures.
