UAE Non-Oil Sector Records Fastest Growth in 11 Months Driven by Strong Domestic Demand

Abu Dhabi | EcoPulse24

The S&P Global Purchasing Managers' Index (PMI) for the UAE’s non-oil private sector climbed to 54.9 in January 2026, up from 54.2 in December, marking its highest level in nearly 11 months. This signals a faster pace of expansion in non-oil economic activity.

The improvement was primarily driven by a strong increase in new orders, which grew at the fastest rate in almost two years, supported by rising domestic demand and greater interest in new products and services. This robust demand encouraged companies to increase output and activity, with purchasing rising at the quickest pace in over six years.

The report also noted a significant improvement in supply chain efficiency, as supplier delivery times shortened, easing operational constraints and enabling firms to meet rising demand more smoothly.

However, businesses faced mounting input cost pressures, with costs rising at the fastest rate in 18 months due to higher prices for raw materials, wages, and operating expenses. Yet, intense market competition limited the ability of companies to pass these increases on to customers, keeping profit margins relatively tight.

Survey respondents remained optimistic about future demand, citing a stable business environment and improved supply chains, despite ongoing cost challenges.

EcoPulse24 Analysis

A PMI reading above 50 indicates ongoing expansion in the non-oil sector. The key message in January’s data is that growth is being propelled by real demand rather than temporary sentiment improvements. The clear acceleration in new orders and purchasing reflects higher operational confidence and readiness for increased activity, reinforcing the resilience of non-oil economic growth entering 2026. At the same time, elevated input costs without equivalent sales price adjustments highlight that competition remains the main market regulator, preventing full transmission of inflationary pressures to consumers. Overall, the UAE’s non-oil sector is experiencing a phase of healthy and balanced expansion: growth driven by demand and supply improvements, countered by disciplined pricing that limits inflation risks, supporting sustained performance in the coming quarters.