Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
The UAE’s non-oil private sector continued to expand in May, with the seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) rising to 52.6 from 52.1 in April.
The PMI firmly remaining above the 50 mark and rising signals expansion in economic activity, demonstrating resilience despite disruptions around the Strait of Hormuz.
The PMI report said operating conditions improved during May, with output growth reaching a three-month high.
Around 21% of firms reported increased activity during the month, linking the improvement to stronger market demand, project expansion and government-backed initiatives, the report said.
The report said the index remained above the neutral 50 mark, signalling continued improvement in the health of the non-oil private sector, although the pace of growth remained below its long-run average of 54.3.
New business continued to expand in May, though growth remained subdued amid regional uncertainty. Export sales declined again, but the rate of reduction moderated considerably from April.
The report said firms continued to work through existing orders, with backlogs of work accumulating at the slowest pace in nearly three years. Employment also continued to rise, though at a softer pace, as companies balanced hiring needs with cost pressures and increased automation.
Supply-chain conditions remained under pressure during the month, with restrictions in the Strait of Hormuz affecting input deliveries and causing knock-on effects across downstream sectors. However, the report indicated that firms continued to manage operations despite these challenges.
Cost pressures remained elevated, driven mainly by higher material costs and transport fees. Even so, firms lowered selling charges slightly for the first time since June 2025, as competitive pressures limited their ability to pass on higher costs to customers.
David Owen, Principal Economist at S&P Global Market Intelligence, said disruptions to maritime trade had affected supply chains across the UAE economy in May.
“The continued cut-off to maritime trade had a cascading effect through the UAE economy in May. Input deliveries were delayed to the greatest extent since the height of the COVID-19 pandemic in April 2020, with some firms reporting that disruptions to manufacturing production schedules fed through to other sectors,” Owen said.
Despite the near-term challenges, business confidence remained positive. The report said firms continued to expect output growth over the coming year, supported by strong pipelines and hopes for market recovery.
“Positively, the longer-term outlook remained strong in May, suggesting that businesses still view these current challenges as temporary and expect growth to bounce back quickly,” Owen said.
Dubai PMI
In Dubai, the PMI improved to 52.0 in May from 51.6 in April, signalling a continued improvement in the health of the non-oil private sector.
The report said Dubai’s non-oil private sector remained in expansion territory, although output growth moderated further during the month.
New orders continued to rise, but at a modest pace, as firms reported subdued client demand conditions and higher operating costs.
Suppliers’ delivery times lengthened in May, with firms reporting that sea route restrictions had constrained vendor performance. Input prices also rose steeply, driven by elevated transportation costs and increases in oil and material prices.
“Output prices, however, fell slightly as companies reported that competitive market conditions had limited their ability to pass through cost increases to clients,” the report said.
