Business activity in the UAE continued to grow in September, although the rate of output expansion in the non-oil private sector was the slowest in three years. 

The S&P Global PMI Index for the UAE fell to 53.8 in last month, down from 54.2 in August. While it remains above the neutral mark of 50, this figure represents the second-lowest reading in three years, surpassing only July’s score of 53.7, The National reports.

Although businesses surveyed reported an increase in output last month due to stronger demand, the growth rate slowed to its lowest level since September 2021, according to a report by S&P Global Market Intelligence published on Thursday.  

New business for non-oil companies in the Emirates saw a significant rise in September, bolstered by a boost in export sales. However, the pace of expansion decelerated, marking the second-weakest rate in a year and a half. 

“Businesses faced further challenges with the completion of new work, despite a slowing of sales growth and a strong uplift in purchases,” said David Owen, senior economist at S&P Global Market Intelligence. 

“Competition remained another area of difficulty, with panellists [surveyed] reporting that tougher market conditions had led to a more cautious outlook for the upcoming year – output expectations are now at their lowest since early 2023.”

A recent trend of rising selling prices continued in September, with businesses increasing charges at the fastest rate since January 2018. This rise followed another significant hike in rates, with shipping, petrol, technology, and maintenance costs frequently cited as contributing factors to inflationary pressures, according to the survey. 

Despite the deceleration in growth within the UAE's non-oil private sector, the overall economy is projected to sustain strong growth momentum this year. 

The economy, which experienced 3.4% growth in the first quarter of the year, is anticipated to expand by 4% in 2024, fuelled by advancements in the non-oil sector, according to the latest data from the Central Bank of the UAE. 

The non-oil sector is expected to maintain its strength, growing by 5.2% in 2024 and 5.3% in 2025.  

This growth is primarily attributed to initiatives aimed at attracting foreign investments and ongoing structural reforms, such as allowing 100% ownership of foreign businesses and implementing tax reforms, according to the banking regulator.

In addition, the Emirates recorded a historic Dh1.4 trillion in non-oil foreign trade during the first half of this year, highlighting the recent surge in economic and trade agreements it has established with partners across various continents.