Overview
The United Arab Emirates' non-oil private sector recorded its weakest monthly expansion in almost four years in March, according to the seasonally adjusted S&P Global UAE Purchasing Managers' Index (PMI). The headline index dropped to 52.9 in March from 55.0 in February, remaining above the 50.0 threshold that separates growth from contraction but indicating a pronounced slowdown compared with the prior month.
Output and orders
Both production and incoming demand moderated sharply. The output subindex slid to 54.9 in March from 61.8 in February, representing the softest rate of growth for output since June 2021. New business also eased, with the new orders subindex retreating to 54.5 from 59.5 in February, the slowest expansion in new orders since August of last year.
Sectoral impacts and commentary
According to David Owen, senior economist at S&P Global Market Intelligence, anecdotal feedback from firms pointed to the Middle East conflict as a key factor reducing demand and disrupting supply chains. He noted that tourism, retail and logistics appeared most affected, while technology and construction reported a softer, but still notable, impact on activity. Despite the headwinds, Owen observed that many companies maintained resilient order books and continued to expand output overall.
Supply chain, backlogs and expectations
Supplier lead times lengthened in March for the first time since September 2021 following the closure of the Strait of Hormuz. Backlogs of work rose at the fastest rate seen so far this year. Meanwhile, business sentiment about activity over the next 12 months fell to its weakest level in just over five years, indicating growing caution among firms about future conditions.
Dubai readings
Dubai, the region's business and tourism hub, also saw a moderation in non-oil activity. The headline PMI for Dubai fell to 53.2 in March from 54.6 in February, representing the weakest improvement in non-oil business conditions there for nine months.
Implications
The March PMI profile shows broad-based softening across demand and output metrics for the UAE non-oil private sector, with particular pressure on tourism, retail and logistics. Supplier delays and rising backlogs add operational strain, while reduced business confidence points to increased downside risk for near-term activity.