The UAE and Saudi Arabia’s non-oil sectors demonstrated resilience in September, showcasing considerable growth despite regional tensions linked to the Iran conflict. The latest economic indicators reveal a continued upward trajectory, suggesting both nations are on a solid recovery path.

Positive Economic Indicators

In Saudi Arabia, the seasonally adjusted Purchasing Managers’ Index (PMI) from Riyad Bank climbed to 55.3 in September, a rise from 53.8 in August. This figure remains significantly above the neutral threshold of 50, signaling ongoing economic expansion. Notably, this growth marks the strongest improvement in non-oil sector activities since February. The increased strength of the business environment reflects heightened demand for goods and services, with new orders exhibiting robust growth levels consistent with long-term averages. While output growth showed some signs of softening, the overall business climate has remained positive, with a steady influx of new clients and increased spending.

Economist Naif Alghaith emphasized the demand surge as a catalyst for the acceleration in new orders, which reached their highest pace since early 2023. This positive trend not only reflects strong domestic consumption but also aligns with various ongoing investment activities and government initiatives. Moreover, businesses noted that improved market conditions contributed to higher client acquisition rates, thereby boosting economic optimism for the months ahead. However, it’s worth mentioning that foreign new orders lagged, having declined for seven consecutive months, which businesses attributed to supply chain disruptions caused by the regional conflict.

UAE Market Dynamics

Similarly, the non-oil private sector in the UAE experienced notable advancements in September. Demand dynamics saw a marked improvement, allowing businesses to increase their selling prices for the first time in over 15 years due to rising input costs. The S&P Global UAE PMI, maintaining a steady 55.3, indicates that the non-oil economy has successfully navigated challenges faced earlier in the year related to regional unrest. Principal economist David Owen commented on the surge in both local and foreign demand, citing that new export business grew at the fastest rate in nearly two years.

Furthermore, firms in the UAE benefited from improved output conditions that facilitated higher production levels. Staffing also increased modestly as companies ramped up their purchasing activities to meet the growing demand. Although businesses witnessed a slowdown in the magnitudes of order expansion from the previous month, foreign business activity provided a supportive boost, hitting its most robust growth since late 2024. Despite these optimistic developments, an upswing in output prices was observed, raising concerns about potential inflationary pressures.

Dubai’s Economic Growth

Dubai, one of the Middle East’s largest commercial hubs, also reported significant growth in its non-oil private sector. The PMI for Dubai rose to 54.5 in September, indicating a solid enhancement in business conditions compared to 54.1 in August. This growth was notably aided by an accelerated rise in output, marking the strongest pace observed thus far in the year. New orders surged, driven by a substantial increase in overseas business.

Although Dubai’s employment rates increased during this month, the backlog of work grew at a fast rate. The uptick in output price inflation points to pressures from rising operational costs being passed on to consumers, reflecting trends across the wider Gulf region. Companies in Dubai are actively leveraging stronger demand conditions, yet they face ongoing challenges due to potential disruptions in supply chains and external market pressures.

As these economies continue to demonstrate robustness against regional tensions, the focus will likely shift toward sustaining this momentum and managing any inflationary effects that may arise from burgeoning demand and increasing input costs.