The UAE’s non-oil activity holds steady in February

The UAE’s non-oil activity maintained growth in February staying close within the margins of a nine-month high achieved in December on the back of new business, according to S&P Global UAE PMI (pdf). The headline figure stayed flat at 55.0 in February, unchanged from January.

REMEMBER- The all-important 50.0 mark is the threshold separating contraction from growth. Anything above 50 denotes expansion, while anything below indicates contraction.

Growth in new orders saw a slight slowdown: The new orders subindex fell to 57.3 in February, down from 59.0 in January, marking its lowest level since October of last year, according to data seen by Reuters. Some firms reported dampened growth driven by “competition from domestic and foreign sources.” However, growth in new business activity spurred a rise in output, with around 29% of firms surveyed reporting higher activity than in January, and just 5% reporting slowed activity.

Employment similarly remained steady throughout the month, with most firms keeping employment unchanged, while job creation remained limited. A continued increase in the volume of unfinished business persisted, driven both by administrative delays and the accumulation of new work. “While robust growth in business activity indicates that the pipeline of orders should eventually be addressed, other factors such as weak job creation and administrative delays pose risks to this outlook,” S&P Global Senior Economist David Owen said.

Continued growth in new orders spurred a rise in input purchases, albeit at the softest level in three months. Input cost inflation saw its first acceleration since July 2024, which some companies attributed to “the passing on of higher material prices by suppliers,” coupled with higher costs for maintenance and technology.

Business sentiment over the UAE’s 12-month outlook remains shaky: Firms’ confidence about future activity in the UAE remains limited, as businesses “continue to feel the pressure of intense competition, which has capped price increases,” Owen said. However, businesses remain “eager to secure new work, which contributed to a rapid accumulation of backlogged orders.”