UAE Non-Oil Sector Growth Remains Robust

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.

The S&P Global UAE PMI eased slightly to 54.2 in December 2025 from November’s nine-month high of 54.8, but continued to signal a robust improvement in non-oil private sector conditions. Business activity expanded at one of the fastest rates seen this year, supported by firm demand, rising customer orders, and favourable domestic policies. Output growth remained strong, with over a quarter of firms reporting higher production as workloads increased. Employment growth, however, was more cautious, as companies faced intensifying cost pressures and tighter margins. Input costs rose at the sharpest pace in over a year, driven by higher wages, transport, and maintenance expenses, prompting firms to manage costs through leaner inventories. Despite these pressures, selling prices increased modestly and business confidence stayed positive, underpinned by stronger sales pipelines and resilient demand heading into 2026.