Stronger demand and accelerated hiring boost UAE business activity in February.
Dubai: Business activity in the UAE’s non-oil private sector accelerated in February, marking its fastest growth in a year, driven by rising demand, robust new orders, and improving supply chain conditions.
The S&P Global UAE Purchasing Managers’ Index (PMI) edged up from 54.9 in January to 55.0 in February, reaching its highest level in 12 months and indicating a solid expansion in business conditions.
Output growth accelerated to its fastest pace since April 2024, fueled by a steady influx of new work and sustained momentum in sectors such as construction, real estate, logistics, and technology.
David Owen, Senior Economist at S&P Global Market Intelligence, said the data reflects a positive start to the year for the domestic economy.
“The UAE PMI indicated the strongest growth in non-oil business conditions in a year during February, with output rising rapidly in response to strong inflows of new work.”
Strong demand drives expansion
Companies reported a sharp increase in new orders in February, supported by a mix of tourism growth, expanding e-commerce channels, and rising interest in artificial intelligence-related products.
Survey responses also highlighted targeted marketing efforts and successful contract work as key factors behind the recent rise in activity.
While international demand contributed modestly, most of the growth in sales was driven by the domestic market.
The surge in new projects and contracts put additional pressure on operational capacity, resulting in a significant buildup of outstanding work during the month.
The backlog of unfinished orders rose sharply, driven by strong inflows of new work as well as administrative delays related to shipments and project processing.
Hiring and inventories rise
In response to the growing pipeline of work, businesses increased their workforce.
Employment grew modestly in February, recording the strongest increase in staffing levels since November, as firms focused on expanding capacity and supporting future growth.
Companies also continued rebuilding inventories of purchased inputs.
Supplier delivery times improved notably during the month, enabling firms to raise their stock levels for the second consecutive month.
Many survey respondents highlighted that suppliers showed greater flexibility and were able to deliver goods more quickly to meet rising demand.
Owen noted that improvements in supply chains helped companies prepare for further expansion.
“Firms again faced relatively little friction in their input supply chains, with lead times improving rapidly. This enabled companies to rebuild stocks, putting them in a stronger position to meet client demand,” he said.
Cost pressures ease
Input cost inflation eased in February, providing some relief to businesses after a spike in price pressures earlier this year.
Survey data showed that input prices rose only marginally, marking the slowest increase since October.
Many companies attributed the easing of cost pressures to a decline in fuel prices, although some firms still reported higher costs for raw materials.
Selling prices rose for the eighth consecutive month, but the pace of increase remained modest due to strong competition.
Owen said the latest data indicates that recent cost pressures may be moderating.
“Non-oil firms also signaled a slowdown in input cost inflation in February, helping to ease concerns following last month’s spike in price pressures,” he noted.
Dubai activity remains strong
Dubai’s non-oil private sector continued to expand in February, although the pace of growth eased slightly.
The Dubai PMI slipped from 55.9 in January to 54.6 in February, still reflecting solid improvements in operating conditions despite a modest slowdown in output and new order growth.
Businesses in the emirate reported new opportunities driven by tourism, population growth, marketing initiatives, and the adoption of artificial intelligence technologies.
Companies also increased hiring, with employment rising at the fastest rate seen in two years.
Cost pressures in Dubai also eased, with overall input costs increasing at the slowest rate in seven months.
