The UAE’s non-oil private sector began 2026 on a strong footing, with fresh data showing robust expansion in January driven by rising domestic demand, strong performance in Dubai, and improving business sentiment. The increase in the Purchasing Managers’ Index (PMI) reflects sustained economic momentum and highlights the resilience of the country’s diversified growth model.
A key driver of the expansion was a sharp rise in new orders, supported by solid consumer spending and increased business activity across key sectors such as retail, tourism, logistics, construction, and professional services. Companies reported stronger demand from local markets, with Dubai once again acting as a major engine of growth due to its vibrant trade, tourism flows, and large-scale events calendar.
The improvement in demand encouraged firms to increase inventories, signalling confidence in future sales and a readiness to meet higher workloads. This stock-building activity suggests that businesses expect current growth trends to continue in the coming months, supported by favourable economic conditions and ongoing government initiatives to stimulate investment and consumption.
At the same time, input costs increased, reflecting higher prices for raw materials, transport, and operating expenses. While cost pressures remain a challenge, many companies demonstrated an ability to manage them through efficiency gains, selective price adjustments, and improved supply chain planning. Importantly, rising costs did not significantly dampen optimism, indicating that firms remain confident in their pricing power and demand outlook.
Business confidence improved notably in January, underpinned by expectations of sustained economic growth, continued infrastructure spending, and strong consumer activity. Government reforms, pro-business regulations, and long-term strategic initiatives aimed at strengthening the non-oil economy continue to provide a supportive environment for private sector expansion.
The strong PMI reading also reflects the UAE’s broader economic strengths, including its position as a regional trade hub, its openness to global talent and investment, and its focus on innovation and digital transformation. Dubai’s role as a growth catalyst remains particularly important, benefiting from tourism, real estate activity, and international business inflows.
Overall, the January 2026 PMI data underscores the UAE’s successful transition toward a more diversified and resilient economy. With strong domestic demand, rising confidence, and continued policy support, the non-oil sector is well positioned to sustain growth and contribute meaningfully to the country’s long-term economic development.
