UAE Non-Oil Private Sector Growth Improves as Output Reaches Three-Month High

Abu Dhabi | EcoPulse24

Business conditions in the UAE’s non-oil private sector improved modestly in May 2026, supported by stronger output growth, project expansion, and government-backed initiatives, despite ongoing pressure from regional geopolitical tensions, supply-chain disruptions, and rising operating costs.

The S&P Global UAE PMI rose to 52.6 in May from 52.1 in April, signaling a slight improvement in non-oil private sector activity and remaining above the 50-point threshold that separates expansion from contraction.

Output Growth Accelerates

Survey data showed that output growth accelerated to its strongest pace in three months, driven by stronger demand, project expansion, and continued support from government-led initiatives.

However, overall business growth remained relatively subdued as companies continued to navigate a challenging operating environment.

New Business Remains Weak

While firms continued to report growth in new business, the pace remained close to April’s 62-month low, highlighting persistent caution among customers and businesses.

Export sales also continued to decline, reflecting weaker external demand and the impact of ongoing regional and global trade disruptions.

Employment Growth Slows

Employment growth weakened in May, falling to its slowest pace since October.

According to the survey, softer demand conditions, higher operating costs, and increased automation contributed to the slower pace of hiring across the non-oil private sector.

Supply Chains Face Renewed Pressure

Supply-chain conditions deteriorated during the month, with supplier delivery times lengthening to the greatest extent since April 2020.

The survey linked the delays to disruptions affecting shipping routes through the Strait of Hormuz, which have increased logistical challenges for businesses across the region.

Input Costs Rise Sharply

Input costs increased at the second-fastest rate in nearly two years, driven by higher material prices and transportation expenses.

The rise in operating costs highlights the inflationary pressures facing businesses despite the continued expansion in overall activity.

EcoPulse24 Analysis

The latest PMI reading indicates that the UAE’s non-oil economy remains in expansion territory, supported by project activity and steady domestic demand.

At the same time, the survey highlights a more complex operating environment. New business growth remains subdued, export sales continue to contract, and supply-chain disruptions linked to regional tensions are increasing delivery times and business costs.

While stronger output growth demonstrates resilience within the UAE economy, developments in regional shipping routes, trade flows, and input costs will remain key factors influencing business activity during the second half of 2026.