UAE Non-Oil Private Sector Growth Slows to Four-Year Low in May Amid Tariff Concerns
Dubai, UAE – Growth in the United Arab Emirates’ (UAE) non-oil private sector dropped to its lowest point in four years in May, a business survey revealed. While demand remained robust, the slowdown signals the impact of U.S. trade tariffs on the Gulf region’s second-largest economy.
The S&P Global Purchasing Managers’ Index (PMI), seasonally adjusted, declined to 53.3 last month from 54.0 in April, marking its lowest reading in 44 months.
Despite this dip from its recent strong performance, demand conditions remained solid, supporting a notable increase in output. “From an overall perspective, the survey signals that the UAE economy is performing well, but the softer increases in output and new orders hint at momentum easing,” commented David Owen, Senior Economist at S&P Global Market Intelligence. He added that while businesses continued to see strong client demand, some firms reported that competitive pressures and weaker trade due to U.S. tariffs had curbed growth. The generally subdued outlook suggests companies are preparing for slower expansion.
The survey also indicated a record decrease in input stocks, as firms aimed to streamline holdings amidst the slowing momentum. Growth in backlogs, though still significant, fell to a 16-month low. Conversely, employment growth was the strongest seen in exactly one year, often attributed by respondents to elevated workloads and rising new orders. Firms also reported a modest rise in input costs in May, marking the slowest rate of inflation in nearly 18 months.
Looking ahead, business optimism eased to its lowest level since January, with roughly 10% of companies expecting an expansion in the coming year. Separately, the Dubai PMI remained at 52.9 in May, matching its lowest level since early 2022, though it still signaled a solid expansion in operating conditions across the emirate’s non-oil private sector.
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