UAE’s Private Sector Sees Fastest Recovery in 11 Months
PMI for the UAE Climbs to 54.9 Points in January
Business Outlook Improves to Highest Level in 15 Months
At the start of 2026, businesses in Dubai’s non-oil private sector experienced significant improvements in operating conditions, with an uptick in customer spending and heightened confidence. The overall sales growth reached its fastest rate since March 2024.
This positive trend accelerated hiring activity, while companies resumed inventory accumulation, indicating optimism about sustained demand. Despite a slowdown in overall activity growth compared to December, the levels remained relatively high. Furthermore, business outlook indicators reached their highest point in four months, driven by expectations of increased customer demand in the near future.
Simultaneously, sales prices experienced a slight increase, albeit minor, marking the lowest rise in four months.
UAE Insights
In the non-oil sector of the UAE, businesses experienced a swift increase in new orders at the beginning of 2026, marking the fastest growth seen in nearly two years. Production forecasts also improved, contributing to a significant upsurge in purchasing activity. However, declining profit margins also contributed to increased demand.
S&P Global’s Purchasing Managers’ Index (PMI) for the UAE rose from 54.2 points in December to 54.9 points in January, the highest reading in 11 months, reflecting substantial improvements in sector conditions.
Business activity continued to rise in January, with a slight stabilization in the growth rate compared to December, noted as generally observable. Many survey respondents reported that the surge in new business orders fueled activity, while others highlighted an improvement in economic conditions, particularly in sectors like real estate and technology. However, some mentioned declining production due to increased competitive pressures, shifts in trading patterns, and rising costs.
Similarly, the volume of new orders received by non-oil companies surged sharply in January, marking the fastest increase in 22 months, indicating a strong shift in growth momentum since mid-last year. Companies reported increased demand from local clients, along with positive feedback regarding new products and services, contrasting with a relatively modest increase in new orders from international markets.
Despite the accelerated sales growth, non-oil firms appeared to be narrowing their price margins in January in response to market competition, resulting in a modest increase in average prices for products and services.
When it comes to purchasing, January data indicated the largest increase in procurement of production inputs in the non-oil sector in six and a half years, driven by inventory building and heightened demand for supplies. Consequently, companies managed to increase their inventories significantly since last February.
Firms replenished their production inputs at a quicker pace, partly due to a sharp decline in average delivery times. As with procurement, supplier performance saw the most considerable improvement in six and a half years.
The rise in inventory levels, enhanced supply chains, and a decrease in reports of administrative delays collectively helped reduce the backlog of work during January. Although the recent increase in backlogs was strong and above the overall trend, it was the weakest in two years. Capacity pressure relief was aided by a continued, albeit marginal, increase in employment.
In conclusion, non-oil businesses exhibited a more optimistic outlook for the future. Companies’ expectations improved to their highest level in 15 months, with many participants in the survey anticipating further enhancements in demand conditions, alongside plans for expansion.
David Owen, Senior Economist at S&P Global, stated that the UAE’s non-oil economy began the new year on a solid footing as new demand surged sharply, prompting companies to increase production and significantly expand their purchases. The rise in inventory levels also benefited from a rapid decline in delivery times, allowing firms to alleviate some of the pressures on operational capacities.
He added, “The sharp increase in purchasing activity, the highest in six and a half years, had a strong impact on production input prices in January.”