Recent data has highlighted a notable slowdown in the growth of the UAE’s non-oil private sector, dropping to its lowest point in four years. According to the latest S&P Global Purchasing Managers’ Index (PMI), the growth index dipped to 53.3 in May from April’s 54.0—marking a 44-month low. Despite this, demand conditions continue to remain strong, suggesting resilience in the sector.
David Owen, a senior economist at S&P Global Market Intelligence, commented, “While the UAE economy remains robust overall, the easing momentum is clear, particularly due to competitive pressures and the ripple effects of US trade tariffs.”
Businesses in the UAE are actively adjusting to this softer growth trajectory. A significant reduction in input stocks was observed, indicating firms’ proactive strategies to streamline their operations in response to slower momentum. Meanwhile, the rate of backlog accumulation slowed significantly, reaching its lowest in 16 months, though still indicating a healthy demand.
Interestingly, employment numbers painted a brighter picture, showing the strongest increase in exactly one year. Companies attributed this surge to heightened workloads driven by solid incoming orders. This demonstrates that despite growth slowing, businesses remain committed to scaling their workforce to meet ongoing customer demand.
On the cost front, input price inflation rose modestly in May, marking the slowest increase in nearly eighteen months. This easing inflation rate might offer a slight relief to firms managing tighter margins amid slower market conditions.
Looking forward, optimism among UAE businesses has slightly waned, with just under 10% anticipating strong growth over the next year—the lowest level of confidence since January.
Meanwhile, Dubai specifically mirrored the national trend, with its PMI holding steady at 52.9 in May, equaling the lowest since early 2022. Nevertheless, this indicates a continued, solid performance within Dubai’s non-oil private sector.
Overall, while growth momentum in the UAE’s non-oil sector has slowed, the strong underlying demand and proactive business strategies demonstrate resilience and adaptability in the face of global economic challenges.
Source: https://www.zawya.com/en/economy/gcc/uae-non-oil-business-sector-growth-slows-to-4-year-low-pmi-qqecav35
