Non-oil private sector businesses in the UAE reported a marked slowdown in output growth in March, as the Middle East conflict weighed on customer demand, disrupted supply chains and intensified price pressures, a business survey revealed.
While sales growth eased, it remained positive, but expectations for future activity fell to their lowest level in more than five years.
The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI), fell to 52.9 in March from 55.0 in February. While remaining above the 50.0 threshold that signals expansion, the reading was the joint lowest since June 2021, matching July 2025.
"The UAE non-oil private sector was knocked back by the impacts of the war in the Middle East in March. That said, for many firms, orders books were resilient and output expanded. Anecdotal comments suggested that sectors such as tourism, retail and logistics were the most affected, whereas segments such as technology and construction signalled a softer, but still notable impact,” said David Owen, Senior Economist at S&P Global Market Intelligence,
The survey members indicated the closure of the Strait of Hormuz led to longer wait times on inputs and contributed to larger increase in backlogs and cost pressures. Overall purchase prices rose at the fastest pace since July 2024. Businesses increasingly passed on higher input costs to customers to protect margins, pushing average selling prices up by the sharpest margin in nearly 11 and a half years.
Even as long term expansion strategies and government spending buoyed sentiment, some firms expressed concern about how deep and lasting the war’s economic fallout could be.
Dubai PMI
The Dubai PMI fell to 53.2 in March, from 54.6 in February, signalling the weakest upturn in non-oil private sector conditions for nine months as output rates and new business growth softened.
Supply chains came under pressure, with non-oil firms reporting the longest delivery delays since July 2022. Cost pressures also intensified, while difficulties in securing materials led to a record fall in input inventories.
Looking ahead, Dubai firms expressed only marginal optimism about output growth over the next 12 months, with business confidence at its weakest level since end-2020.