UAE Private Sector Growth Reaches Highest Level in 11 Months Boosted by Sales Momentum

SadaNews - The non-oil private sector in the UAE recorded a strong start at the beginning of this year, achieving the highest growth level in 11 months, supported by an expansion in local sales at the fastest pace in nearly two years, along with a noticeable improvement in the real estate and technology sectors.

The main Purchasing Managers' Index issued by "S&P Global" rose to 54.9 points last month from 54.2 points in December, remaining above the neutral mark of fifty that separates growth from contraction.

The report indicated that the volume of new orders increased at its fastest pace in 22 months, driven primarily by domestic demand, while contributions from foreign markets were relatively limited. Despite the overall increase in production, some companies noted growing pressures due to intense competition, changing trade patterns, and rising costs.

Strong Conditions in the UAE Private Sector

David Owen, a senior economist at "S&P Global Market Intelligence," stated: "The UAE's non-oil economy began its new year on solid foundations, as new demand sharply increased, driving companies to significantly raise production and expand their purchases."

Purchasing activity in January recorded its largest increase in six and a half years, as companies sought to strengthen inventories and meet rising demand, resulting in inventories reaching their highest level since February 2025.

Competition Cuts Profit Margins

Despite the strong demand, the report noted that intense competition prompted companies to cut their price margins, resulting in only a slight increase in the prices of goods and services during January.

In contrast, the costs of production inputs rose at the fastest pace in 18 months, driven by increased demand for raw materials and rising wages, although the pace of wage growth slowed compared to December.

Owen clarified that the sharp increase in purchasing activity, the largest in six and a half years, had a strong impact on the prices of production inputs.

He pointed out that the rate of cost inflation across the sector reached its highest level in 18 months, as companies faced rising prices for a range of materials. Owen stated, "Selling prices did not experience significant movement, indicating that companies are forced to absorb higher costs to avoid losses in a rapidly growing but competitive market."

UAE companies expressed a noticeable improvement in future confidence, with activity expectations rising to their highest level in 15 months, supported by positive demand outlooks and expansion efforts.

Dubai: Strong Growth and Increasing Confidence

In Dubai, the report revealed an improvement in operating conditions, with the highest growth in new business recorded in 22 months. The emirate witnessed an improvement in customer spending and an increase in confidence levels, contributing to a faster pace of hiring and increased inventories.

Meanwhile, the rate of cost inflation rose to its highest level in a year and a half, while selling prices increased at the slowest pace in four months.