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Growth in the UAE’s non-oil private sector remained subdued in May as the Iran war and supply chain disruptions caused by the near-closure of the Strait of Hormuz weighed on demand and pushed costs higher.
The S&P Global UAE Purchasing Managers’ Index (PMI) rose to 52.6 in May from 52.1 in April, but remained well below its long-run average of 54.3.
“The continued cut-off to maritime trade had a cascading effect through the UAE economy in May,” said David Owen, Principal Economist at S&P Global Market Intelligence.
Export orders declined, reflecting both the disruption to shipping routes and persistent uncertainty over the duration of the conflict, he added.
New business growth remained subdued, staying close to April’s 62-month low as regional tensions continued to fuel uncertainty. Order books were again weighed down by falling export sales, although the pace of decline eased notably from April.
Supply chains worsened in May, with delivery times lengthening at the fastest rate since April 2020. Disruptions linked to the Strait of Hormuz delayed inputs and affected multiple sectors.
Input costs rose at the fastest pace in nearly two years, driven by higher transport fees. Despite the increase, competitive pressures led firms to offer slight discounts to customers.
However, survey respondents remained optimistic about the year-ahead outlook, supported by strong pipelines and expectations of a market recovery.
Dubai PMI
Output growth among Dubai’s non-oil firms weakened further in May, with the PMI edging up to 52.0 from 51.6 in April, as higher costs and softer demand weighed on activity.
(Writing by Brinda Darasha; editing by Seban Scaria)
