RIYADH: The UAE’s non-oil private sector strengthened in July, with the Purchasing Managers’ Index rising to 52.7 from 50.8 in June, while Qatar’s PMI improved to 48.5 from 47.6 as it remained below the neutral 50-point threshold.
The latest S&P Global Purchasing Managers’ Index survey showed the UAE’s headline reading climbing to its highest level in four months, supported by stronger demand, a five-month high in new business growth, and a return to employment growth.
Despite the improvement, businesses continued to face persistent supply chain disruptions and elevated cost pressures, while business confidence softened amid ongoing competitive pressures.
The survey adds to broader signs of resilience in the UAE economy despite regional geopolitical tensions, with the International Monetary Fund saying in July that the country has demonstrated “significant resilience” to the conflict in the Middle East as it forecast real gross domestic product growth of 3.3 percent in 2026 and 4.4 percent in 2027.
David Owen, principal economist at S&P Global Market Intelligence, said: “July data signalled some relief for UAE companies after the PMI dropped perilously close to the 50 neutral threshold in June, as a restoration of business confidence and a period of smoother trade flows allowed for a pick-up in growth.”
He added: “Although the July PMI reading of 52.7 remains a step lower than the levels observed prior to the Middle East conflict, it provided some assurance that businesses were coping better after a heavily disrupted Q2.”
Owen said the volatile situation in the Strait of Hormuz continued to cloud the outlook and keep price pressures elevated in July, with firms struggling to fully pass higher costs on to customers amid intense competition.
“Firms also saw a reduction in inventories despite a sharp rise in purchasing, suggesting they are still operating with tighter stock volumes and longer supply schedules,” he added.
Qatar downturn eases
Qatar’s PMI rose to a five-month high in July, signalling the slowest deterioration in non-energy business conditions during the current five-month downturn.
A S&P Global survey showed new orders declined at a slower pace, while employment and backlogged work increased. Firms also remained optimistic about business activity over the next 12 months despite the headline index remaining below the neutral 50-point threshold.
The latest PMI survey coincides with Qatar’s continued efforts to advance its economic diversification agenda beyond the energy sector.
The IMF said Qatar’s economy is expected to average around 4 percent growth in the medium term, supported by the expansion of the North Field LNG project and reforms under the Third National Development Strategy.
Trevor Balchin, economics director at S&P Global Market Intelligence, said: “The PMI remained on a recovery path in July, rising to a five-month high. This was mainly driven by a much slower fall in new business, the weightiest component, and a faster rate of job creation.
“A renewed fall in output partially offset these influences, but the drop in activity was only modest overall.”
He added that lower output led to a further build-up of inventories in July, although this also reflected optimism about future business conditions, with some firms building inventory ahead of expected growth and restarted projects.
“This trend was most notable in manufacturing, where the outlook strengthened even as wider business expectations moderated,” said Balchin.
The S&P Global Market Intelligence official noted that the July data continued to signal growing inflationary pressure.
He also highlighted that input price inflation accelerated for a record seventh month in a row, while charges were increased at the fastest rate since December 2022.
Despite this, purchase price inflation eased for the second month running, suggesting that raw material price increases peaked in May.
