The Private Sector in the UAE Sees Its Fastest Recovery in 11 Months at the Start of 2026
As we enter 2026, the private sector in the UAE is showing significant improvement, recording its fastest recovery in 11 months. This period has witnessed substantial stimulation in economic activity, highlighting the private sector’s role as a driving force for growth in the region. The increase in new businesses, alongside improved market conditions, has brought the economy to levels of optimism not seen in a long time.
Highest Level of New Business Growth in Dubai in 22 Months
At the beginning of 2026, the UAE’s Purchasing Managers’ Index (PMI), compiled by S&P Global, recorded a notable increase, rising from 54.2 in December to 54.9 in January. This rise reflects the highest level of growth in 11 months, indicating a significant improvement in the operating conditions of non-oil private sector firms.
Non-oil companies experienced a marked increase in new orders, which contributed to strengthening supply chains and boosting purchasing levels. Some have noted that declining profit margins have impacted demand, pointing to positive developments in certain sectors such as real estate and technology.
Accelerating Growth in Orders and Rising Product Sales
Firms in the UAE that do not rely on oil recorded the fastest increase in incoming orders in two years. This strong demand growth resulted from a robust push to enhance sales levels, as companies faced competitive pressures and rising production costs, leading to changes in trade patterns that could affect future growth.
Despite the continuous rise in sales, companies faced challenges due to increasing market competition. This came at a time when production costs saw a significant increase, resulting in a slight rise in product and service prices. The growing pressure on wage costs also contributed, although the rate of wage increases has slowed.
Improved Business Outlook and Enhanced Hope for the Future
Recent data from January supports a more optimistic outlook among businesses, with expectations rising to their highest level in 15 months. Studies show that companies anticipate further improvements in demand conditions, reflecting their expansion ambitions.
As economic conditions continue to improve, Dubai has seen a notable recovery in market confidence, leading to increased hiring and the development of new inventories. Despite rising input costs, overall activity growth still reflects optimism among companies regarding their future.
Although market challenges persist, the private sector in the UAE is experiencing a remarkable recovery, raising hopes for future growth and reinforcing its position as a competitive and effective economic hub.