UAE Non-Oil Sector Experiences Slowest Growth in Five Years

Jul 3, 2026

73 min

Jul 3, 2026 05:30

UAE non-oil growth slows to weakest level in five years

## Economic Overview

In June, the UAE's non-oil private sector growth hit its lowest point in over five years. The S&P Global UAE Purchasing Managers’ Index (PMI) dropped to 50.8 from 52.6 in May, indicating a marginal expansion in operating conditions. A PMI above 50 suggests growth, but the latest figure shows a significant slowdown.

## Factors Affecting Growth

The decline is attributed to weaker client demand, delayed spending decisions, geopolitical tensions, rising costs, and increased competition. These factors have collectively slowed private sector activity to its weakest pace in five years.

## Employment Impact

The labor market has been notably affected, with employment falling for the first time in over four years. This decline is the fastest since August 2020, driven by reduced demand, higher costs, and internal productivity measures. Companies have been controlling expenses, which has helped stabilize wage costs.

## Supply Chain and Costs

Supply chains showed improvement with faster delivery times, thanks to easing shipping bottlenecks in the Strait of Hormuz. However, cost inflation remains a challenge, with input prices rising significantly. Companies have absorbed some of these costs to remain competitive, leading to squeezed margins.

## Dubai's Economic Performance

Dubai's non-oil sector also experienced slower growth, with its PMI falling to 50.7 from 52.0 in May. New business growth was minimal, affected by spending delays and reduced travel activity due to regional conflicts. Despite these challenges, business expectations remain positive, particularly for firms with public sector contracts.

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