Business activity in the UAE has shown its strongest momentum since December 2024, with new orders growing at one of the fastest rates in over two years.

The UAE's non-oil private sector saw a marked acceleration in growth in August 2026, driven by a recovery in both domestic and international demand. The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) rose to 55.3, up from 52.7 in July.

This marks the strongest improvement in business conditions since December 2024 and the second consecutive month of acceleration. A PMI reading above 50.0 indicates an expansion in private sector activity.

At the same time, the volume of new orders increased at one of the fastest rates in over two years, while growth in output and overall business activity reached a six-month high.

Demand in the UAE has seen a notable recovery.

One of the primary drivers behind the improved August figures was an increase in client demand.

Companies reported a rebound in customer activity as economic caution, which had emerged due to regional conflict, began to ease. However, geopolitical uncertainty has not fully dissipated and continues to influence business decisions.

David Owen, Chief Economist at S&P Global Market Intelligence, noted that the UAE's non-oil economy has accelerated significantly, with companies becoming more effective at adapting to current conditions.

Positive momentum was observed across several areas: demand increased, delivery times shortened, and price pressures eased.

PMI recovers from a five-year low in June.

The August performance is particularly notable when viewed against the backdrop of the situation earlier this summer.

In June 2026, the UAE PMI fell to 50.8, its lowest level in over five years. By July, the index had recovered to 52.7, supported by rising client spending and the easing of some immediate impacts from regional instability.

In August, the index reached 55.3.

The three-month trend is as follows:

• June — 50.8;
• July — 52.7;
• August — 55.3.

This consistent acceleration points to a recovery in non-oil business activity following a challenging second quarter.

Export demand grows for the second consecutive month.

The improvement is not limited to the domestic market alone.

New export orders have increased for the second consecutive month following a decline throughout the second quarter. This indicates a gradual recovery in international demand for goods and services from UAE companies.

The PMI trend is consistent with the overall growth of the country's non-oil foreign trade.

In the first half of 2026, its volume reached a record 1.937 trillion AED, an increase of 13.1% compared to the same period last year.

Non-oil exports grew even faster, rising by 23.9% to a record 452.8 billion AED.

International trade is receiving additional support from the expansion of the Comprehensive Economic Partnership Agreement (CEPA) network. Since the program's launch in 2021, the UAE has signed 38 such agreements, broadening market access for companies.

Businesses are actively increasing inventories

Against the backdrop of rising sales, enterprises have begun to noticeably increase their procurement of raw materials and other essential resources.

Stocks of purchased goods grew at their fastest pace in nearly three years in August.

This trend reflects both expectations of further demand growth and a business drive to prepare for potential supply chain disruptions.

Companies have also been working more actively with local suppliers. This has helped shorten delivery times and partially reduce reliance on external logistics risks.

Thus, businesses are responding to the changing economic landscape not only by increasing procurement but also by adjusting the structure of their supply chains.

Cost growth in the UAE has slowed

Alongside the recovery in demand, the business cost environment has improved.

Overall input cost inflation slowed to its lowest level since February. However, companies continued to report rising expenses for specific categories, including energy, fuel, cement, steel, and chemical products.

Selling prices rose moderately, although the rate of increase reached a four-month high.

Some businesses raised prices due to higher costs and stronger demand. Other companies continued to offer discounts and special promotions due to intense competition.

The combination of rising demand and more moderate cost increases is creating more favorable operating conditions for parts of the non-oil sector.

The energy market remains a source of uncertainty

Despite improvements in most indicators, the regional situation continues to pose risks to the economy.

As of September 3, Brent crude was trading at approximately $95 per barrel. The market continued to assess the consequences of renewed tensions between the US and Iran, as well as potential risks to shipping through the Strait of Hormuz.

For the UAE, the stability of regional transport routes is significant not only for the energy sector but also for trade, logistics, and other areas of the non-oil economy.

Therefore, future PMI trends will depend, among other factors, on how the geopolitical situation develops.

Companies remain cautious about hiring.

Employment was one of the few weak components in the August survey.

Despite an increase in sales and workloads, staff numbers fell for the second time in three months.

Businesses are currently hesitant to expand their permanent workforce amid ongoing uncertainty.

At the same time, rapid growth in new orders led to an increase in backlogs. In some cases, demand grew faster than companies could scale their operational capacity.

This shows that businesses are already feeling a real recovery in activity, yet they remain conservative regarding long-term staffing decisions.

Business confidence has reached its highest level since April.

Despite caution in hiring, companies' expectations for the next 12 months have improved.

The level of business optimism in August reached its highest point since April.

Factors supporting business expectations included:

• growth in sales;
• expected increase in construction activity;
• hopes for a reduction in geopolitical tensions.

For comparison, in July, only about 7% of surveyed companies expected business activity to grow over the coming year.

Thus, by the end of the summer, both current demand indicators and business expectations regarding the future economic situation had improved.

Dubai PMI rose to 54.1 points.

Positive momentum was also observed specifically in Dubai.

The S&P Global Dubai PMI increased from 51.7 points in July to 54.1 points in August.

Business activity and new orders grew at their fastest pace in six months, driven by increased client spending and a recovery in export demand.

Purchasing activity saw a particularly notable shift, with Dubai companies increasing their inventories at the fastest rate since December 2017.

At the same time, staffing levels saw a slight decline, while rising demand placed increased pressure on existing operational capacity.

In contrast to the national trend, business expenses in Dubai rose more rapidly, with companies recording their sharpest increase in total costs in four months.

Nevertheless, the rise in the PMI from 51.7 to 54.1 points signals a significant improvement in the health of the emirate's non-oil private sector.

The non-oil sector accounts for 79.4% of the UAE economy

August PMI data complements the official statistics on the country's economy.

In the first quarter of 2026, the UAE's real GDP grew by 3% year-on-year, reaching 485 billion AED.

Non-oil GDP grew by 4.8% during the same period, with its share of the economy reaching 79.4%.

The highest growth rates were recorded in:

• financial and insurance activities — 17.3%;
• construction — 8.1%;
• human health and social work activities — 7.7%;
• information and communications — 5.9%;
• real estate — 4.8%;
• wholesale and retail trade — 2.6%.

This followed a strong 2025, when the UAE's real GDP grew by 6.2% to 1.9 trillion AED, and non-oil GDP increased by 6.8% to 1.5 trillion AED.

While the PMI is not a direct measure of GDP, its coverage of manufacturing, construction, trade, and services provides a timely assessment of changes in private sector business activity.

What the rise in PMI means for the UAE real estate market

For the real estate market, the acceleration of the non-oil economy serves as a key macroeconomic indicator.

Rising business activity and new orders may support demand for commercial space, offices, and logistics real estate. If business expansion leads to more active hiring in the future, this could also bolster demand for residential property and long-term rentals.

The construction sector is of particular importance, having grown by 8.1% in the first quarter of 2026. Furthermore, PMI participants themselves expect construction activity to continue increasing.

However, current employment figures require a cautious assessment. Companies are not yet rushing to expand their staff, so an acceleration in the PMI cannot be automatically interpreted as a guarantee of further growth in real estate demand or values.

For investors, the sustainability of this trend over the coming months is more important.

Why non-oil economic dynamics matter to investors

Economic diversification is one of the fundamental drivers of long-term development in the UAE real estate market.

The larger the share of finance, trade, technology, construction, professional services, and other non-oil industries, the less the real estate market depends solely on the oil cycle.

In the first quarter of 2026, the non-oil sector already accounted for 79.4% of the country's real GDP. At the same time, the real estate sector grew by 4.8%, and construction by 8.1%.

The August PMI of 55.3 points shows that after a sharp slowdown at the beginning of the summer, the private sector is picking up pace again.

For real estate buyers and investors, it is especially important to monitor whether the growth in new orders is sustained, whether improved business expectations translate into job creation, and whether domestic and international demand continues to strengthen.

The UAE economy shows recovery despite external risks

Regional instability remains one of the main sources of uncertainty for the UAE.

The International Monetary Fund has previously noted that the country maintains significant resilience due to strong economic fundamentals, reserves, and the government's ability to respond promptly to external shocks.

At the same time, conflict and periodic issues with shipping through the Strait of Hormuz can exert pressure on trade, transport, tourism, and real estate.

Against this backdrop, the rise of the UAE PMI to 55.3 points and the Dubai PMI to 54.1 points serves as an important real-time signal of recovering business activity.

August data shows strengthening domestic demand, a return of export orders, and increased business confidence. If this trend continues, it could provide additional support for the non-oil economy and related sectors, including construction and real estate.