The UAE’s non-oil private sector gathered fresh momentum in February, with business activity and new orders driving the strongest expansion in a year and reinforcing the country’s reputation as one of the region’s fastest-growing diversified economies.
The latest survey by S&P Global showed the seasonally adjusted UAE Purchasing Managers’ Index (PMI) edging up to 55.0 in February from 54.9 in January, marking the highest level in 12 months and signalling a robust improvement in operating conditions across the non-oil economy. Any reading above 50 indicates expansion.
The data underscores the continued resilience of the UAE’s diversified economic model, where sectors such as construction, real estate, logistics, tourism and technology are emerging as key engines of growth.
Business activity expanded at the fastest pace since April 2024, supported by strong domestic demand, successful contract wins and aggressive marketing strategies by companies seeking to capture opportunities in a rapidly expanding economy.
The surge in output was mirrored by a sharp increase in new orders. Companies reported a steep rise in fresh business, only slightly softer than January’s near two-year high, as rising tourism inflows, expanding e-commerce platforms and growing demand for artificial intelligence-related products and services fuelled activity.
Economists say the strong PMI reading reflects the broader strength of the UAE economy, which has become increasingly less dependent on hydrocarbons over the past decade.
According to the Central Bank of the UAE, the country’s real GDP is expected to grow by around 5 per cent in 2026, driven largely by non-oil sectors that now account for more than 70 per cent of the national economy. Non-oil activities expanded by about 4.5 per cent in 2025, supported by tourism, trade, transport, manufacturing, and financial services.
“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.
“So far, the data points to an encouraging picture for the domestic economy in the first quarter. Demand has continued to pressure business capacity, suggesting additional expansions in output and employment may be necessary,” he said.
One notable feature of the latest PMI survey was the sharp increase in outstanding business, as companies struggled to keep pace with rising demand and new project pipelines.
Backlogs of work increased markedly in February, reflecting a combination of strong order inflows, administrative processing delays and shipment checks. The build-up in unfinished work suggests companies may need to expand capacity further in the coming months.
Employment levels also rose, with companies stepping up hiring to cope with growing workloads. While job creation remained moderate across the UAE as a whole, the increase marked the largest rise in staffing since November.
In Dubai, hiring momentum was even stronger. The emirate’s PMI survey showed employment expanding at the fastest pace in two years, highlighting the city’s continued role as a hub for regional trade, tourism and business services.
The Dubai PMI slipped slightly to 54.6 in February from 55.9 in January, signalling a softer but still strong expansion in the emirate’s non-oil private sector.
Companies in Dubai reported continued growth in output and new orders, supported by rising population inflows, marketing initiatives, tourism growth and increased adoption of advanced technologies such as artificial intelligence.
Another positive signal for businesses came from improved supply chains. Inflation pressures also eased slightly.
Input prices rose only marginally in February, marking the slowest increase since October, with many firms citing lower fuel costs as a key factor in moderating operating expenses. While material costs remained elevated in some sectors, the overall rise in costs was relatively subdued compared with earlier months.Despite this, businesses maintained a cautious approach to pricing.
Economists say the latest PMI readings highlight the growing depth of the UAE’s non-oil economy, which has been strengthened by structural reforms, pro-business policies and sustained government investment.
The country has emerged as a global hub for trade, logistics, technology and tourism, while initiatives such as 100 per cent foreign ownership, long-term residency visas and digital economy programmes have helped attract international businesses and skilled professionals.
Analysts at Oxford Economics recently noted that strong population growth, infrastructure spending and robust private investment are likely to sustain the UAE’s non-oil expansion in the coming years.
For businesses, the outlook remains upbeat. The S&P Global survey showed companies continuing to express strong confidence in future activity, expecting demand conditions to remain favourable over the next 12 months despite slightly softer sentiment compared with January’s recent peak.
