UAE Non-Oil Growth Slows Despite Strong Demand
PMI Hits 44-Month Low
UAE non-oil private sector growth dropped to its lowest level in four years in May. The S&P Global Purchasing Managers’ Index (PMI) fell to 53.3 from April’s 54.0. This is the lowest reading since September 2021, signaling a slowdown in business momentum. Despite this, the PMI remains above 50.0, indicating continued economic expansion and resilience in core sectors.
Demand Stays Strong, Output Grows
Strong demand conditions supported output growth across the UAE’s private sector this May. Firms reported a sharp increase in new orders from both local and international clients. David Owen from S&P Global said demand remained strong despite weaker overall momentum. He noted competitive pressures and U.S. tariffs had impacted trade and output levels. Firms continued to meet client expectations with strong delivery and efficient supply chain management.
Business Sentiment and Inventory Trends
Optimism weakened in May, with just 10% of firms expecting growth next year. Firms saw a record drop in input stocks, aiming to streamline amid slower expansion. This stock reduction followed softer growth in output and orders and reduced input purchasing.
Backlogs and Hiring Activity
Backlogs of work rose again but at the slowest pace in 16 months. Despite slowing momentum, firms added staff at the fastest pace in one year. Businesses linked hiring to increased workloads and strong incoming orders across major sectors.
Input Costs and Inflation
Input costs rose only slightly, marking the slowest inflation rate in 18 months. Firms managed expenses well and avoided raising prices significantly to retain customer loyalty.
Dubai PMI Shows Steady Growth
Dubai’s PMI remained steady at 52.9 in May, matching April’s figure. This was the joint-lowest reading since early 2022 but still showed solid growth. Firms in Dubai saw stronger order growth and stable business conditions with higher client confidence.
Outlook
UAE businesses expect modest growth in the months ahead. Companies continue hiring and producing but remain cautious amid global trade concerns.