An economic tracker indicated that the non-oil private sector in the UAE experienced improvements that were registered at 12 months high in February due to a spiraling business activity and new work orders.
In its latest Purchasing Managers’ Index report, S&P Global stated that the UAE’s PMI surged to 55 in February from 54.9 in January. A PMI greater than 50 signifies expansion, whereas a PMI less than 50 signifies contraction.
The rebound of the non-oil-based private sector in the UAE is consistent with the larger trend in the Gulf Cooperation Council region, where nations, including Saudi Arabia, are undertaking some effort to diversify their economies as a way of preventing overdependence on crude revenues.
The Kingdom’s PMI stood at 56.3 percent, the highest in the region, while Kuwait reached a reading of 54.5 percent in January.
David Owen, Senior Economist at S&P Global Market Intelligence, said, “The UAE PMI signalled the strongest growth in non-oil business conditions for a year in February, with output increasing rapidly in response to strong inflows of new work. So far, the data points to an encouraging picture for the domestic economy in the first quarter of this year.”
The report states that the more robust performance of non-oil sectors was supported by increased demand, winning contracts, and the expansion of major industries such as construction, real estate, logistics, and technology.
Additional factors that contributed to the growth include increasing tourist arrivals, the expansion of e-commerce channels, and growing demand for AI-related products.
Although international orders also played a role in developing the non-oil industry, the growth in export sales was low, implying that the growth in sales was primarily contributed by the domestic demand.
The analysis identified that the number of jobs had increased marginally in February, the most significant improvement since November of last year.
Non-oil UAE business has been able to add to its inventories of goods purchased to use as inputs in the second month in a row, which was aided by yet another speedy rise in supplier delivery times.
In terms of future prognosis, non-oil companies in the UAE were positive, but the degree of faith dropped in comparison with the level of January.
Owen reported, “The outlook is positive, as demand has continued to pressure business capacity, suggesting additional expansions in output and employment may be necessary.”
S&P Global, in the same report, indicated that Dubai’s PMI has gone down to 54.6 percent in February compared to 55.9 percent in January.
Output and growth in new orders rates reversed and slowed, although in general terms, there was an emphasis on greater opportunities and new projects.
The release has also pointed to demand being boosted by other factors, such as marketing efforts, AI adoption, population growth, and greater tourism.
