{"id":116668,"date":"2026-05-06T00:00:00","date_gmt":"2026-05-06T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/uae\/?p=116668"},"modified":"2026-05-06T02:40:10","modified_gmt":"2026-05-06T02:40:10","slug":"non-oil-sector-takes-another-hit-in-april-amid-soaring-prices-supply-chain-disruptions","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/uae\/2026\/05\/06\/non-oil-sector-takes-another-hit-in-april-amid-soaring-prices-supply-chain-disruptions\/","title":{"rendered":"Non-oil sector takes another hit in April amid soaring prices, supply chain disruptions"},"content":{"rendered":"

The non-oil private sector had its weakest month in more than five years<\/strong> in April<\/strong>, amid increased cost pressures and ongoing supply chain disruptions due to the regional war, according to S&P Global\u2019s latest Purchasing Managers\u2019 Index (PMI) report (pdf)<\/a>. The country\u2019s seasonally adjusted PMI slipped to 52.1, down from 52.9 in March, marking the softest expansion since February 2021.<\/p>\n

A slump in demand as tourism fell during the month, coupled with shipping route disruptions, led to a decline in output and export orders<\/strong>, according to the report. <\/p>\n

The drop was largely expected, and the fact that it didn\u2019t fall by a wider margin is a sign that some recovery measures have helped. <\/strong>\u201cThe smaller drop reflects the fact that the UAE\u2019s use of central bank measures, including the extension of credit to indebted businesses and individuals, is helping sustain the momentum,\u201d MENA economist Hamzeh Al Gaood tells EnterpriseAM. <\/p>\n

REMEMBER- <\/strong>The 50.0 mark is what separates expansion from contraction, so anything below 50.0 signals contraction. The last time the UAE\u2019s non-oil sector was in contraction territory was in 2020, at the peak of Covid-19. <\/p>\n

Costs bite: <\/strong>Oil and transport costs rose sharply, leading some businesses to reduce staff and freeze (or cut) salaries, with salary inflation falling to a 33-month low and workforce numbers across the non-oil sector falling to their lowest levels so far this year. <\/p>\n

\u201cFirms are looking to limit the impact where possible, with slowdowns in purchasing and hiring growth<\/strong> and even some reports of wage cuts, but a broad increase in price pressures is nevertheless still likely to dampen customer spending across the economy more widely,\u201d Senior Economist at S&P Global Market Intelligence David Owen said.<\/p>\n

As expected, consumers are starting to feel it:<\/strong> Businesses are starting to pass some of the cost pressures on to consumers, with average selling prices rising at a historically sharp pace.<\/p>\n

We\u2019ve been expecting this: <\/strong>As we recently noted<\/a>, surging fuel, shipping, and ins. expenses have been weighing on businesses. While many firms initially attempted to insulate customers by absorbing these overheads, they are now beginning to pass those costs on to the broader economy. The hardest-hit sectors, analysts tell us, are tourism and hospitality, construction, transport and logistics, and retail and food. <\/p>\n

At least more people are hopeful now: <\/strong>Perhaps as the ceasefire settles (attacks on Monday notwithstanding\u2026) and with consumer demand still proving resilient, firms were upbeat about the coming year, with expectations rising to a three-month high. <\/p>\n

Looking ahead: <\/strong>\u201cAs inflation increases because of how long the strait has been closed for, we\u2019re likely to see more of an impact on PMIs, especially from an output and inventory movement perspective,\u201d Al Gaood says.<\/p>\n

Could we see contractio<\/strong>n ahead? <\/strong>\u201cIt would be reasonable to expect a contraction in the non-oil sector that is on par with the early months of Covid and possibly worse, because Covid did not impact the manufacturing sector or seabound trade in the same way,\u201d director of Khalij Economics and GCC analyst at GlobalSource Partners tells EnterpriseAM. Still, the slowdown in April was \u201cremarkably mild\u201d all things considered, he adds. <\/p>\n

Over in Dubai <\/p>\n

It was a similar story in Dubai<\/strong>, with conditions softening to their weakest since September 2021, and the PMI falling to 51.6, down from 53.2 a month earlier. Despite output and business growth softening on supply chain disruptions, businesses were again optimistic about demand recovery in the year ahead.<\/p>\n

Elsewhere in the region <\/p>\n