The seasonally-adjusted purchasing managers’ index hit 55 for the UAE in February, a 12-month high, according to the S&P Global UAE PMI (pdf). That’s up fractionally from 54.9 in January and well above the 50.0 neutral threshold, fueled by strong domestic demand and significant activity in the construction, real estate, logistics, and tech sectors. Then again, that was before the outbreak of war in the region…

Business activity surged at its fastest pace since April 2024. While export sales remained modest, domestic orders were buoyed by increased tourism, e-commerce expansion, and a spike in demand for AI-related products. Supply chains also remained resilient, with firms reporting rapidly improving lead times that allowed for a strategic rebuilding of inventories.

It was a different story in Dubai, where the PMI momentum decoupled from the national trend, slipping to 54.6 from 55.9 in January. While the expansion of output and new orders in the emirate lost some steam, it remained sharp overall.

The labor market showed significant strength, with job creation in Dubai reaching a two-year high in February as firms aggressively expanded capacity to manage future workloads.

What’s next? “The outlook is also positive, as demand has continued to pressurize business capacity, suggesting additional expansions in output and employment may be necessary,” said David Owen, senior economist at S&P Global Market Intelligence. He added that the lack of friction in input supply chains has “allowed companies to rebuild stocks, putting them in a better position to meet client demand.”

DISCLAIMER- This is based on data compiled before the war hit the region on 28 February. As we reported yesterday, the war is expected to hit the non-oil sector the most as tourism and supply chains take a hit, along with a potential exodus of workers and expats.

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