The UAE's non-oil business activity is showing resilience despite the ongoing Iran war, with a recent report indicating a four-month high in business activity and a boost in employment numbers. This is a positive sign for the country's economy, which has faced challenges due to the conflict. The seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI) climbed to 52.7 in July, up from 50.8 in June, indicating growth in economic activity. This is a significant improvement from the previous month, where the PMI dropped close to the neutral threshold of 50.0. The data suggests that businesses are adapting to the uncertain situation, with a restoration of business confidence and smoother trade flows allowing for a pick-up in growth. However, the underlying fundamentals remain solid, and the broader economy has faced a slowdown due to the war's impact, resulting in cautious client activity and competitive pressures. The labour market in the UAE, which experienced one of the sharpest contractions in June since the height of the Covid-19 pandemic, also bounced back at the beginning of the third quarter. Workforce levels returned to growth in July, with firms citing "stronger demand" as a justification for "renewed hiring". This is a positive development, as it indicates that businesses are confident enough to invest in their workforce. However, business confidence towards future output has faded for the third consecutive month, with only 7% of firms predicting an uplift over the coming year. This is a cause for concern, as it suggests that businesses are uncertain about the future. The Iran war has tipped the region into one of its worst geopolitical crises in decades, with the conflict leading to Iranian strikes on its Arab neighbours and the closure of the Strait of Hormuz. The war has had a significant impact on the UAE's economy, with the country facing daily missile and drone attacks. However, despite the war, the UAE's economy has maintained growth but at a slower rate, according to the International Monetary Fund. The UAE's economy grew by 3% on an annual basis in the first three months of this year, driven by expansion in the country's non-oil sector. The Emirates' non-oil gross domestic product grew 4.8%, accounting for 79.4% of the contribution to the national economy. The war has also boosted new order growth to the fastest pace since February, as businesses surveyed in the PMI pointed to a recovery in customer confidence. Domestic infrastructure projects provided additional stimulus, though many firms continued to report tight client budgets and intense market competition. The rise in export sales was modest, but it was the fastest seen in a year. Outstanding business accumulated at the strongest rate in four months in July, reflecting both rising customer demand and supply constraints from freight congestion. The Dubai PMI rose to 51.7 in July, mainly driven by a rebound in new business growth, which jumped to the highest level since March on improving customer demand. However, business activity rose at the weakest rate since June 2021, as panelists cited headwinds from competition and price pressures. Confidence in future output slipped to a four-month low, with businesses reporting a "solid increase in input costs in July". Hiring activity in the emirate recovered slightly, following a drop in June. The UAE's non-oil business activity is showing resilience despite the ongoing Iran war, with a recent report indicating a four-month high in business activity and a boost in employment numbers. This is a positive sign for the country's economy, which has faced challenges due to the conflict. The seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI) climbed to 52.7 in July, up from 50.8 in June, indicating growth in economic activity. This is a significant improvement from the previous month, where the PMI dropped close to the neutral threshold of 50.0. The data suggests that businesses are adapting to the uncertain situation, with a restoration of business confidence and smoother trade flows allowing for a pick-up in growth. However, the underlying fundamentals remain solid, and the broader economy has faced a slowdown due to the war's impact, resulting in cautious client activity and competitive pressures. The labour market in the UAE, which experienced one of the sharpest contractions in June since the height of the Covid-19 pandemic, also bounced back at the beginning of the third quarter. Workforce levels returned to growth in July, with firms citing "stronger demand" as a justification for "renewed hiring". This is a positive development, as it indicates that businesses are confident enough to invest in their workforce. However, business confidence towards future output has faded for the third consecutive month, with only 7% of firms predicting an uplift over the coming year. This is a cause for concern, as it suggests that businesses are uncertain about the future. The Iran war has tipped the region into one of its worst geopolitical crises in decades, with the conflict leading to Iranian strikes on its Arab neighbours and the closure of the Strait of Hormuz. The war has had a significant impact on the UAE's economy, with the country facing daily missile and drone attacks. However, despite the war, the UAE's economy has maintained growth but at a slower rate, according to the International Monetary Fund. The UAE's economy grew by 3% on an annual basis in the first three months of this year, driven by expansion in the country's non-oil sector. The Emirates' non-oil gross domestic product grew 4.8%, accounting for 79.4% of the contribution to the national economy. The war has also boosted new order growth to the fastest pace since February, as businesses surveyed in the PMI pointed to a recovery in customer confidence. Domestic infrastructure projects provided additional stimulus, though many firms continued to report tight client budgets and intense market competition. The rise in export sales was modest, but it was the fastest seen in a year. Outstanding business accumulated at the strongest rate in four months in July, reflecting both rising customer demand and supply constraints from freight congestion. The Dubai PMI rose to 51.7 in July, mainly driven by a rebound in new business growth, which jumped to the highest level since March on improving customer demand. However, business activity rose at the weakest rate since June 2021, as panelists cited headwinds from competition and price pressures. Confidence in future output slipped to a four-month low, with businesses reporting a "solid increase in input costs in July". Hiring activity in the emirate recovered slightly, following a drop in June.
