Market Update: We break down the business implications, market impact, and expert insights related to Market Update: UAE non-oil private sector growth hits 12-month high in February – Full Analysis.
The UAE’s non-oil private sector continued to expand in February, with growth reaching a 12-month high, as business activity rose at the sharpest rate since April 2024 and new orders soared.
The seasonally adjusted S&P Global UAE Purchasing Managers’ Index climbed to 55 in February, from 54.9 in January. A reading above 50 indicates economic expansion.
The PMI report comes as the UAE, along with the other Gulf countries, has been facing attacks by Iran since Saturday, after Tehran was hit by Israeli and US forces. While flights have been affected due to airspace closures, officials in the Emirates have stressed that business activity across the country is continuing.
The growth last month was primarily attributed to a “supportive demand environment, successful contract work, targeted marketing efforts and industry growth in sectors such as construction, real estate, logistics and technology”, the report 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,” said David Owen, senior economist at S&P Global Market Intelligence.
Firms again faced relatively little friction when it came to input supply chains, “with lead times improving rapidly”, he said. “This allowed companies to rebuild stocks, putting them in a better position to meet client demand.”
New orders also rose sharply at a rate that was fractionally softer than January’s near two-year high.
Several firms surveyed highlighted the contribution of increased tourism, the expansion of e-commerce channels and rising demand for AI-related products, the report said. While international orders contributed to the overall market, sales growth was mainly driven by domestic demand.
The UAE has been focusing on diversifying its economy away from oil and has invested heavily in sectors including technology, manufacturing and tourism. The Emirates’ economy is estimated to have grown 5 per cent in 2025, the UAE Central Bank said in December.
That sharp expansion was driven by a 4.9 per cent growth in the non-oil sector and 5.4 per cent growth in hydrocarbons due to the “faster-than-expected reversal of oil production cuts following the Opec+ quota increases”, the banking regulator said at the time.
Rise in employment
With firms undertaking new projects and reporting high order inflows, the non-oil sector experienced a steep increase in outstanding work in February, the PMI found.
Companies also continued to boost staffing capacity in February. Employment numbers rose modestly, marking the largest uplift since last November, the report said.
The rate of cost inflation also fell last month, while prices charged by non-oil businesses rose for the eighth consecutive month. But the increase “was slight”, with firms mentioning that competitive pressures had curbed pricing power.
Dubai job creation hits two-year high
Job creation in Dubai’s non-oil sector hit a two-year high in February as firms highlighted increased opportunities and new projects, the Dubai PMI found.
The overall headline index slipped to 54.6 in February from 55.9 in January as rates of output and new order growth lost momentum, but remained sharp overall.
Demand was also lifted by marketing activities, AI adoption, population growth and increased tourism, the report said.
Meanwhile, price inflation slowed, with total costs rising to the least extent in seven months. Average selling prices increased at a faster pace than in January.