A. SREENIVASA REDDY (ABU DHABI)
Growth in the UAE’s non-oil private sector ticked up to a 12-month high in February, with the seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) rising to 55.0 in February from 54.9 in January, signalling rapid increases in business activity and new work.
The PMI, a key indicator tracking conditions across the manufacturing and services sectors, pointed to solid growth in activity levels during the month. A PMI reading above 50 indicates an expansion in economic activity.
“UAE non-oil companies continued to expand their activity at a substantial pace in February. In fact, the rate of growth accelerated to its strongest since April 2024,” the S&P report said.
“The surge in output was primarily attributed by survey respondents to a supportive demand environment, successful contract work, targeted marketing efforts and industry growth in sectors such as construction, real estate, logistics, and technology,” the report said.
This positive trend was further reinforced by a notable rise in new orders. “Several firms highlighted the contribution of increased tourism, the expansion of e-commerce channels and rising demand for AI-related products,” the report said.
While international orders contributed to the uptick, growth was mainly driven by domestic demand, the report noted.
The non-oil sector experienced a steep increase in outstanding work, with firms undertaking new projects and reporting high order inflows.
On the hiring front, employment numbers rose modestly, marking the largest uplift since last November.
UAE non-oil businesses also increased their inventories of purchased inputs for the second month running in February. According to panellists interviewed by S&P, vendors demonstrated greater flexibility with their supply lines and were able to ship items more quickly in response to demand-driven client requests.
Input prices increased marginally and at the weakest pace since last October. “Many respondents attributed this easing in inflationary pressures to a decline in fuel prices, although general increases in material costs were still noted,” the PMI report said.
Prices charged by non-oil businesses rose for the eighth consecutive month, but the uptick was slight, with firms citing competitive pressures, the report said.
“The strong demand environment continued to drive positive expectations for future activity. Output forecasts for 12 months' time were solid,” the report concluded.
David Owen, Senior Economist at S&P Global Market Intelligence, noted several positive trends this month.
“The UAE PMI signalled the strongest growth in non-oil business conditions for a year in February, pointing to an encouraging picture for the domestic economy in Q1,” he said.
The outlook for the future is also positive. “Demand has continued to pressurise business capacity, suggesting additional expansions in output and employment may be necessary,” Owen said.
The S&P senior economist also noted improvements in the delivery times of input supplies. “This allowed companies to rebuild stocks, putting them in a better position to meet client demand,” he added.
“Non-oil firms also signalled a slowing of input cost inflation in February, helping to soothe concerns after last month’s spike in price pressures,” Owen said.
Dubai PMI
The Dubai PMI signalled a softer upturn in operating conditions across the non-oil private sector in February, with the headline index slipping from 55.9 in January to 54.6.
“Rates of output and new order growth lost momentum, but remained sharp overall, with firms highlighting increased opportunities and new projects,” the report said.
Dubai non-oil firms reported increased efforts to add to their workforces in February. “Employment rose at a solid pace that was the fastest observed in two years,” the report said.
Dubai companies also saw a slowing of input price inflation, with total costs rising to the least extent in seven months. However, average selling prices increased at a faster pace than in January.