In February, the UAE's non-oil private sector experienced a boost in activity, with business operations and new orders leading to the most robust expansion in a year. This reaffirms the country's position as one of the fastest-growing diversified economies in the region.

The latest survey conducted by S&P Global revealed that the UAE Purchasing Managers' Index (PMI) reached 55.0 in February, up from 54.9 in January. This marked the highest level in 12 months, indicating a significant improvement in operating conditions across the non-oil economy. A reading above 50 signifies expansion.

The data highlights the ongoing strength of the UAE's diverse economic structure, where sectors like construction, real estate, logistics, tourism, and technology are emerging as key drivers of growth.

Business activity saw its fastest growth since April 2024, driven by strong domestic demand, successful contract acquisitions, and proactive marketing efforts by companies aiming to capitalize on the expanding economy.

The surge in output was accompanied by a significant rise in new orders. Companies reported a notable increase in fresh business, slightly below the near two-year high seen in January, fueled by growing tourism, expanding e-commerce platforms, and increasing demand for AI-related products and services.

Economists view the strong PMI reading as a reflection of the overall robustness of the UAE economy, which has reduced its reliance on oil over the past decade.

As per the Central Bank of the UAE, the country's real GDP is projected to grow by approximately 5% in 2026, primarily driven by non-oil sectors, now constituting over 70% of the national economy. Non-oil activities expanded by around 4.5% in 2025, supported by tourism, trade, transport, manufacturing, and financial services.

"The UAE PMI indicated the strongest growth in non-oil business conditions in a year in February, with output rising quickly in response to robust new work inflows," said David Owen, Senior Economist at S&P Global Market Intelligence.

"The data so far paints an encouraging picture for the domestic economy in the first quarter. Demand has continued to strain business capacity, indicating potential expansions in output and employment may be necessary," he added.

A notable aspect of the latest PMI survey was the sharp increase in outstanding business, as companies struggled to keep up with rising demand and new project pipelines.

Backlogs of work grew significantly in February, reflecting strong order inflows, administrative delays, and shipment checks. This accumulation of unfinished work suggests companies might need to further expand their capacity in the upcoming months.

Employment levels also rose, with companies increasing hiring to manage growing workloads. While job creation remained moderate overall in the UAE, it marked the most substantial increase in staffing since November.

In Dubai, the pace of hiring was even stronger. The city's PMI survey indicated employment expanding at the fastest rate in two years, underscoring Dubai's role as a hub for regional trade, tourism, and business services.

The Dubai PMI slightly decreased to 54.6 in February from 55.9 in January, indicating a slightly softer but still robust expansion in the emirate's non-oil private sector.

Companies in Dubai reported ongoing growth in output and new orders, supported by increasing population inflows, marketing efforts, tourism growth, and the adoption of advanced technologies like artificial intelligence.

Improved supply chains and slightly eased inflation pressures provided another positive signal for businesses.

Input prices rose marginally in February, the slowest increase since October, with lower fuel costs cited by many firms as a key factor in moderating operating expenses. Although material costs remained high in some sectors, the overall cost increase was relatively subdued compared to previous months. Despite this, businesses maintained a cautious pricing approach.

Economists point out that the latest PMI data underscores the increasing depth of the UAE's non-oil economy, bolstered by structural reforms, pro-business policies, and sustained government investments.

The UAE has positioned itself as a global hub for trade, logistics, technology, and tourism, with initiatives such as 100% foreign ownership, long-term residency visas, and digital economy programs attracting international businesses and skilled professionals.

Analysts at Oxford Economics predict that strong population growth, infrastructure spending, and robust private investments will uphold the UAE's non-oil expansion in the years ahead.

Businesses remain optimistic about the future, as indicated by the S&P Global survey showing strong confidence in future activities. Companies anticipate favorable demand conditions over the next 12 months, despite a slightly less optimistic sentiment compared to the recent peak in January.