UAE Non-Oil Sector Growth Softest Since 2021

The S&P Global UAE PMI fell to 52.9 in March 2026 from 55.0 in February, marking the joint-lowest reading since mid-2021 but still indicating a modest improvement in non-oil private sector conditions. The decline reflected a sharp slowdown in output growth, as conflict in the Middle East disrupted supply chains and weighed on demand. New orders continued to rise, though at a seven-month low, with softer tourism and rising uncertainty cited by firms. Supply conditions deteriorated notably, with delivery times lengthening for the first time in over four years due to shipping disruptions, particularly around the Strait of Hormuz. At the same time, input costs surged, prompting firms to increase selling charges at the fastest pace in nearly 11-and-a-half years. Confidence also weakened to a five-year low, reflecting concerns over prolonged disruptions, even as long-term growth prospects and government spending plans continued to offer some support.

The S&P Global UAE PMI edged up to 55 in February 2026 from 54.9 in January, marking the highest reading in a year and signaling a broad-based improvement in the non-oil private sector conditions. Supply chains continued to strengthen, allowing firms to build input inventories more efficiently, while lower fuel prices helped contain cost pressures. New orders rose sharply, driven by tourism, e-commerce, and AI demand. Firms responded to higher workloads by boosting employment, marking the largest rise since last November, and continued to build input inventories, supported by faster deliveries and improved supply chains. On the price front, input prices rose modestly at their slowest pace since last October, while selling prices edged up for the eighth consecutive month amid competitive pressures. Looking ahead, firms remained optimistic, with strong domestic demand, better supply chains, and ongoing project growth supporting a solid start to 2026 despite lingering inflation.

The S&P Global UAE PMI rose to 54.9 in January 2026 from 54.2 in December, marking the strongest reading in nearly a year and pointing to a broad-based improvement in operating conditions. Growth was driven by a sharp acceleration in new business, which expanded at its fastest pace in almost two years as domestic demand improved and new products and services gained traction. Strong order inflows drove activity, while firms increased purchasing at the fastest pace in over six years, aided by quicker deliveries and smoother logistics. On the other hand, input prices rose at the fastest rate in 18 months, driven by higher raw material costs, wages, and operating expenses, yet competitive pressures limited selling price increases, keeping profit margins under pressure. Looking ahead, firms remain optimistic about demand. Despite inflationary headwinds, robust sales growth, improved supply chains, and positive expectations suggest the non-oil sector enters 2026 on solid footing.