UAE firms push selling prices to 15-year high as demand strengthens

Companies across the UAE’s non-oil private sector raised their selling prices in September at the fastest pace in more than 15 years, passing on higher input costs as markedly improving demand strengthened their pricing power. The signal comes from the seasonally adjusted S&P Global UAE Purchasing Managers’ Index, which held steady at 55.3, unchanged from August and well above the 50 mark that indicates growth in economic activity.

S&P called the reading “another indication that the non-oil economy has moved past the midyear slowdown linked to the Middle East conflict”. Business activity increased rapidly during the month, the survey found, and higher output requirements encouraged companies to expand purchasing activity and employment, with staffing numbers rising modestly.

That recovery follows a difficult first half. The UAE’s real gross domestic product grew 0.4 per cent annually to Dh961.9 billion ($262 billion), an expansion driven by non-oil business activity despite the impact of the Iran war. The Federal Competitiveness and Statistics Centre, the federal statistics body, said in a statement on Friday that the non-oil sector’s contribution to GDP over the six-month period increased by 1.8 per cent to 79.2 per cent.

The centre said the results “reflect the continued diversification of the UAE’s economic base and the growing role of non-oil activities”, adding that the sector’s “expanding contribution to economic activity demonstrates the diversity of growth drivers and supports sustainable and balanced growth across a broad range of economic sectors”.

Trade remained the largest contributor to non-oil GDP at 16.2 per cent, followed by financial and insurance at 15.2 per cent, construction at 13.1 per cent, manufacturing at 11.8 per cent and real estate at 7.9 per cent. The five categories together account for roughly 64 per cent of non-oil output.

Financial and insurance was also the quickest-growing sector in the six months through the end of June, expanding 14.8 per cent, more than double the rate of the next-fastest, information and communication at 7.3 per cent. Health and social work grew 6 per cent, construction 5.1 per cent, government 3.6 per cent and real estate 2.3 per cent.

The sectoral split points to a services-led economy in which finance plays a double role, sitting second only to trade in its contribution to non-oil GDP while growing at a pace that far outstrips the 0.4 per cent headline rate. Trade, the largest single contributor, does not appear among the sectors with the fastest growth rates in the period.

The second quarter, however, laid bare the cost of the regional turmoil. Real GDP reached Dh476.9 billion in the quarter, a decline of 2.1 per cent annually, while non-oil activities contracted by 1.1 per cent, as several economic sectors, particularly tourism, transport and trade, were affected by regional developments and disruption to travel. The second-quarter slide goes a long way to explaining the muted 0.4 per cent half-year figure.

By contrast, the half-year numbers stand in sharp relief against 2025, when the UAE’s GDP grew 6.2 per cent year-on-year to Dh1.9 trillion and non-oil GDP jumped 6.8 per cent to Dh1.5 trillion. Non-oil output of Dh1.5 trillion against a Dh1.9 trillion total shows the diversification drive was already well advanced before this year’s disruption.

Taken together, the figures describe an economy whose non-oil base, now close to four-fifths of output, carried growth through a disrupted first half and, on the September evidence, was rebuilding momentum. Whether that holds through the final quarter will depend on how regional conditions evolve.