Business activity in the UAE non-oil private sector reached its fastest pace in a year this February. Companies reported a rise in demand and strong new orders. Improving supply chain conditions also helped the sector. S&P Global UAE Purchasing Managers’ Index rose to 55.0 from 54.9 in January. This is the highest reading in 12 months.
Output growth accelerated to its quickest pace since April 2024. Construction, real estate, logistics, and technology sectors all showed momentum. David Owen, an economist at S&P Global, said the data show a positive start to the year. Output increased rapidly because of strong inflows of new work.
A steep increase in new orders occurred in February. Growth in tourism and e-commerce helped drive this demand. High interest in artificial intelligence products also played a role. While international demand grew a little, most sales came from the domestic market. Marketing efforts and successful contracts also boosted activity.
The surge in projects put pressure on businesses. Backlogs of unfinished orders increased sharply. Firms faced administrative delays with shipments and project processing. To fix this, businesses expanded their workforces. Hiring reached its strongest level since November to support future growth.
Supplier delivery times improved significantly. This allowed firms to rebuild their stocks. Suppliers showed more flexibility to meet the rising demand. Input cost inflation also eased in February. Costs rose at the slowest pace since October. Many firms said lower fuel prices helped, though some raw material costs still went up. Selling prices rose for the eighth month in a row, but the pace was modest due to competition.
Dubai’s non-oil sector also grew, though at a slightly slower pace. The Dubai PMI fell to 54.6 in February from 55.9 in January. Businesses in the city found new opportunities through tourism and population growth. Companies in Dubai also increased hiring at the fastest rate in two years. Input costs in the emirate rose at the slowest pace in seven months.
The UAE non-oil sector shows strong health as output and new work orders rise at record rates. Firms now have better stock levels and more staff to meet client needs. Lower cost pressures also help businesses manage their budgets after price spikes earlier this year. These factors put the private sector in a good position for more expansion.
Also Read: Emerging Business Trends Driving the UAE's Non-Oil Economy Forward