Key insights
- UAE's non-oil private sector showed modest growth in May, hampered by geopolitical tensions and supply chain disruptions, particularly from shipping restrictions in the Strait of Hormuz. This led to longer delivery times and increased input costs, forcing firms to lower selling prices due to competitive pressures. While output growth improved slightly, new business and export sales declined. The slowdown in employment growth and backlogs suggests potential headwinds for future economic activity, with implications for global trade and commodity prices.
Investing.com -- The UAE non-oil private sector recorded modest growth in May as regional geopolitical tensions and supply-chain disruptions limited expansion, according to data released today.
The S&P Global UAE Purchasing Managers’ Index rose to 52.6 in May from 52.1 in April. The reading remained below the long-run average of 54.3. Data were collected between May 12-22, 2026.
Output growth reached a three-month high in May but remained limited compared to historical trends. Around 21% of firms reported increased activity, linking it to stronger market demand, project expansion and government-backed initiatives.
However, 10% of respondents experienced downturns, citing geopolitical disruptions and rising operational costs.
New business growth stayed near April’s 62-month low as regional tensions drove business uncertainty. Export sales declined for the second consecutive month, though the pace of reduction slowed from April.
Supply-chain conditions worsened in May, with delivery times lengthening to the greatest extent since April 2020. Restrictions in the Strait of Hormuz caused widespread disruptions to input deliveries and affected downstream sectors.
Backlogs of work accumulated at the slowest pace in nearly three years as firms found greater capacity to address outstanding orders. Employment growth slowed to its mildest pace since October 2025, with companies citing subdued demand growth, rising input costs and increased automation as limiting factors for hiring.
Input costs rose at the second-fastest pace in almost two years, driven by higher material costs and transport fees. Firms lowered selling prices for the first time since June 2025 as competitive market conditions prevented them from passing cost increases to customers.
The Dubai PMI improved to 52.0 in May from 51.6 in April. Activity growth in Dubai moderated for the fifth consecutive month and was the slowest since June 2021.
Business sentiment remained positive in May, with 12% of firms anticipating output growth over the coming year.
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