The UAE's non-oil private sector delivered its strongest performance in twelve months during February 2026, according to the latest S&P Global Purchasing Managers' Index data released on March 4. The headline PMI reading climbed to 55.0, up from 54.9 in January, signalling an acceleration in business activity that defied the gathering clouds of regional geopolitical tension. With new orders surging, supply chains tightening, and employment ticking higher, the data paints a picture of an economy that continues to fire on multiple cylinders — even as external headwinds intensify.
Understanding the PMI Numbers
The Purchasing Managers' Index is one of the most closely watched economic indicators in the world. A reading above 50 indicates expansion, while anything below signals contraction. The UAE has now maintained an above-50 reading for more than three consecutive years — a sustained run that few economies in the region can match.
February's reading of 55.0 is significant for several reasons. It represents the highest level since February 2025, breaking a stretch of months where the index hovered in the 54 range. More importantly, the underlying components of the index tell a story of broad-based strength rather than growth concentrated in any single sector.
Business Activity Surges to Sharpest Rate Since April 2024
The output sub-index — which measures the actual level of business activity across the non-oil private sector — rose at its sharpest rate since April 2024. This is a particularly telling indicator because it reflects what companies are actually doing, not just what they expect to happen. Firms reported higher production volumes, stronger service delivery, and increased project completions across multiple sectors.
The acceleration was driven by a combination of factors. Domestic demand remained robust, with UAE consumers and businesses continuing to spend despite the noise of regional tensions. International demand also held up, with export orders supported by the UAE's position as a global trading hub that connects markets across Asia, Africa, and Europe.
The UAE PMI signalled the strongest growth in non-oil business conditions for a year in February. Business activity and new orders accelerated, reflecting sustained domestic confidence and growing international demand.
David Owen, Senior Economist, S&P Global Market Intelligence
Sector-by-Sector Breakdown
The February PMI data revealed strength across virtually every major non-oil sector in the UAE economy:
Construction and Real Estate
The construction sector continued to be one of the UAE's strongest performers. Dubai and Abu Dhabi both have substantial project pipelines, with mega-developments, infrastructure upgrades, and residential communities all contributing to demand for construction services. The Dubai real estate market recorded strong transaction volumes in the first two months of 2026, with off-plan sales particularly buoyant as developers launched new projects in established and emerging communities.
Technology and Digital Services
Technology-related businesses reported particularly strong demand, fuelled by the UAE's ongoing digital transformation initiatives. Corporate spending on artificial intelligence, cloud computing, cybersecurity, and digital infrastructure has accelerated sharply, with AI-related positions in the UAE growing by approximately 340 percent since 2022. The Stargate UAE project — a 1-gigawatt compute cluster being built by G42 and operated by OpenAI and Oracle — is expected to bring its first 200-megawatt phase online later in 2026, further cementing the country's position as a regional technology hub.
Tourism and Hospitality
Tourism demand remained a significant growth driver through February, before the regional security situation began to impact travel patterns in early March. The UAE's tourism infrastructure — world-class hotels, entertainment venues, shopping destinations, and cultural attractions — continued to attract visitors from around the world, with the first two months of the year recording strong occupancy rates and average daily rates across the hotel sector.
Logistics and Trade
The UAE's position as a global logistics and trade hub supported strong growth in the transport and warehousing sectors. The country's ports, free zones, and air cargo facilities handle a significant share of trade between Asia, Europe, and Africa, and demand for these services remained elevated through February. The UAE's total foreign trade is forecast to approach the $1 trillion mark by the end of 2026, with the Asia corridor alone accounting for roughly one-third of that volume.
New Orders and Forward-Looking Indicators
New business orders — arguably the most important forward-looking component of the PMI — soared in February. Companies reported a sharp increase in enquiries, contracts, and purchase orders, driven by tourism, e-commerce, and AI-related demand. This suggests that the growth trajectory observed in February has a solid pipeline behind it and is not simply a one-month anomaly.
The new orders data is particularly encouraging because it captures business decisions made before the regional security situation escalated in late February. The extent to which March's PMI data will reflect any disruption from the conflict remains to be seen, but the strength of February's order books provides a significant buffer.
Employment Continues to Grow
Employment across the non-oil private sector rose at its fastest pace since November, though the overall rate of job creation remained modest. Companies reported hiring to meet increased workloads, with demand for skilled workers in technology, finance, engineering, and project management particularly strong.
The employment picture is consistent with broader hiring trends in the UAE. A recent survey found that 72 percent of employees in the UAE plan to look for new jobs in 2026, driven partly by rising AI uncertainty but also by confidence that opportunities are available. The AI, finance, and project management sectors are leading hiring demand, with salaries for AI engineers and data scientists in particular reaching new highs.
Supply Chains and Pricing
Supply chain performance improved significantly in February. Lead times shortened as suppliers increased capacity and international shipping routes normalised. This enabled companies to rebuild inventory stocks that had been depleted during previous months, positioning them to respond quickly to the strong order inflows.
On the pricing front, input cost inflation eased during the month, providing some relief to businesses that had been facing rising materials and energy costs. Selling prices edged up slightly, but competitive pressures kept increases modest. The net result is a slight improvement in operating margins for many non-oil businesses — a welcome development after a period of squeezed profitability.
The Bigger Picture: UAE Economic Resilience
February's PMI data fits into a broader narrative of UAE economic resilience that has defied many predictions. The country's non-oil sector now represents over 70 percent of GDP, a milestone that reflects decades of deliberate diversification away from hydrocarbons. This structural transformation means that the UAE economy is far less vulnerable to oil price swings than it was even a decade ago.
Multiple international institutions have projected strong growth for the UAE in 2026. The World Bank forecasts approximately 5 percent GDP growth, while the Central Bank of the UAE has projected real GDP growth of around 5.3 percent. These figures make the UAE one of the fastest-growing economies among the G20 and the wider Middle East region.
The confidence is shared by the private sector. A recent survey found that 91 percent of CEOs in the UAE expect the country's economic growth to strengthen over the next twelve months — a remarkable level of optimism that reflects the tangible momentum visible in the data.
Challenges Ahead
The strong February data should be read in the context of what has happened since. The escalation of military activity in the Gulf region in late February and early March has introduced significant uncertainty into the economic outlook. Tourism arrivals have dropped sharply, aviation capacity has been slashed, and some international businesses have temporarily shifted staff to work-from-home arrangements or relocated employees to other regional offices.
However, the underlying fundamentals of the UAE economy remain strong. The country's infrastructure is intact, its institutions are functioning, and the diversified nature of its economy means that no single disruption can bring activity to a halt. The construction sector continues to build, technology companies continue to invest, and the UAE's position as a global trade hub ensures that goods continue to flow through its ports and free zones.
The March PMI data, due in early April, will provide the first comprehensive reading of how the regional situation has affected business activity. Most economists expect some softening, but the consensus view is that the UAE's economic fundamentals are strong enough to absorb the shock and recover quickly once conditions normalise.
What It Means for Investors and Businesses
For businesses operating in or considering entry into the UAE market, the February PMI data reinforces several key messages. The non-oil economy is growing, demand is strong across multiple sectors, supply chains are functioning, and the workforce is expanding. These are the conditions that support investment decisions, and they suggest that the UAE's growth story remains intact despite the extraordinary circumstances of early 2026.
The sectors showing the strongest momentum — construction, technology, tourism, and logistics — are precisely the areas where the UAE government has invested most heavily in recent years. This alignment between public investment and private sector growth is one of the UAE's greatest economic strengths, and it is a dynamic that is likely to persist well beyond the current period of regional uncertainty.
