UAE Non-Oil Sector Steadies Amid Hiring Surge: A Closer Look at the April 2025 PMI Data

The United Arab Emirates’ non-oil private sector maintained its expansionary momentum in April 2025, with the S&P Global Purchasing Managers’ Index (PMI) remaining unchanged at 54.0—well above the 50.0 threshold that separates growth from contraction. This stability underscores a resilient economic landscape, driven by a hiring boom, improved supply chain efficiency, and rising business confidence. Let’s dissect the data to uncover opportunities and challenges for investors.

Key Drivers of Growth: Employment and Backlog Management

The star of April’s PMI report was employment, which surged to its fastest pace in 11 months. Firms added staff to tackle growing work backlogs, a critical priority as output expanded in line with strong new orders. While backlogs remain elevated, their growth slowed to the weakest pace in six months—a sign hiring efforts are starting to pay off.

This labor market dynamism is not without hurdles. Input costs rose sharply, fueled by staff wage inflation and higher purchasing expenses. Despite this, firms moderated price hikes for customers, suggesting competitive pressures or cost-control strategies.

Sectoral Insights and Regional Disparities

While the PMI data does not explicitly break down performance by sector, broader economic indicators paint a picture of construction and real estate leading the charge. Infrastructure projects, tourism-driven hospitality investments, and free-trade zone expansions have fueled non-oil GDP growth of 4.9% in 2024, with projections for 5.0% in 2025.

However, regional disparities emerged in April. Dubai’s non-oil PMI dipped slightly to 52.9, reflecting slower new business growth and weaker confidence compared to the national average. This contrasts with the UAE’s manufacturing sector, which held steady at 54.0, aligning with its long-term average of 54.68 since 2011.

Supply Chain Improvements and Cost Pressures

A silver lining in April’s data was the acceleration of supplier deliveries, with delays shortening at the fastest pace since August 2024. This efficiency boost likely reduced the urgency to hire aggressively, allowing firms to focus on managing costs.

Yet input cost inflation remains a concern. Staff wages and raw material prices rose significantly, though selling prices increased at a slower rate—a delicate balancing act for profit margins.

Business Confidence at a Tipping Point

Optimism among UAE firms hit its highest level in 2025, with confidence rising for the third consecutive month. This is rooted in expectations of strong sales pipelines and robust demand, particularly in sectors like tourism, trade, and financial services.

Investment Implications

The April PMI data suggests several actionable insights for investors:

1. Sector Focus: Prioritize construction and real estate stocks, given their role in infrastructure and tourism-driven growth. The UAE’s Vision 2031 aims to double GDP to AED3 trillion, with non-oil sectors like these at the core.
2. Labor-Intensive Plays: Companies in logistics, manufacturing, and hospitality stand to benefit from the hiring surge. Monitor firms with exposure to workforce expansion and supply chain optimization.
3. Monitor Input Costs: High wage and material inflation could pressure margins. Investors should favor firms with pricing power or cost-control strategies, such as those in high-value services or tech-driven industries.
4. Regional Diversification: While Dubai’s slight slowdown is notable, Abu Dhabi and other emirates are driving growth in sectors like renewable energy and healthcare. Diversification across emirates may mitigate risks.

Conclusion: A Resilient Non-Oil Economy, but Challenges Linger

The UAE’s non-oil sector proved its mettle in April 2025, sustaining growth through hiring, supply chain improvements, and rising confidence. With the PMI steady at 54.0—within its long-term average—and business optimism at a peak, the foundation is set for further expansion.

However, investors must remain vigilant. Input cost pressures, regional disparities, and payment delays (which slowed business activity growth to a seven-month low) pose headwinds. The manufacturing sector’s resilience and government diversification policies offer tailwinds, but close monitoring of sector-specific data and inflation trends will be critical.

For now, the UAE’s non-oil story remains compelling. As the economy transitions from oil dependency to a services- and innovation-driven model, sectors like construction, tourism, and financial services are poised to deliver sustained returns—provided firms can navigate cost challenges and supply chain bottlenecks.

The April PMI is a clear signal: the UAE’s non-oil future is bright, but investors must tread carefully amid the headwinds.