The UAE’s non-oil private sector kicked off the year with a clear sense of momentum, powered by a sharp rise in new business and steadier economic conditions across the market.
January data showed activity expanding at its fastest pace in almost two years, with the S&P Global UAE Purchasing Managers’ Index climbing to 54.9, up from 54.2 in December. The reading signals a broad-based improvement in operating conditions, underpinned by a wave of fresh orders.
New business inflows were the standout. Order growth accelerated to a 22-month high as domestic demand strengthened and customers responded positively to new products and services. Export orders, by contrast, edged up only slightly, highlighting that most of the momentum is coming from within the local market.
The surge in demand pushed companies to lift output and ramp up purchasing. Buying activity jumped at its fastest rate in more than six years, a move that came with a cost. Input price inflation climbed to an 18-month high, driven by rising prices for a range of materials. Despite this, firms largely held the line on selling prices, choosing to absorb higher costs rather than risk losing ground in a competitive environment.
Supply conditions offered some relief. Delivery times improved, allowing companies to rebuild inventories more quickly. Capacity pressures also eased marginally as hiring continued, though job growth remained modest.
Confidence about the months ahead strengthened as well. Business expectations rose to a 15-month high, reflecting optimism that demand conditions will continue to improve.
Dubai keeps pace
Dubai’s non-oil private sector mirrored the broader national trend. New business growth reached a two-month high as client spending picked up and operating conditions improved. Companies responded with faster hiring and renewed stockpiling, even as overall activity growth eased slightly from December’s pace.
Input costs, however, continued to climb in the emirate, hitting their highest level in a year and a half. Even so, sentiment improved, with firms expressing greater confidence in stronger demand ahead.
Taken together, the latest figures suggest the UAE’s non-oil economy has entered 2026 with solid momentum—buoyed by demand at home, cautious pricing strategies, and growing confidence that the upswing has room to run.
