UAE Non-Oil Business Activity at a 20-Month High: PMI Rises to 55.3 in August 2026, Dubai PMI Climbs to 54.1

2026-09-03

The UAE’s non-oil private sector grew in August 2026 at its fastest pace since December 2024. The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) rose to 55.3 from 52.7 in July, according to the survey released on 3 September 2026: the second consecutive month of accelerating growth and the highest reading in 20 months. New orders rose at the joint-fastest rate since March 2024, export sales increased for a second month running after declining throughout the second quarter, output expanded at the fastest rate in six months, and input cost inflation eased to its lowest level since February. Companies built up stocks of inputs at the sharpest pace in nearly three years. The Dubai PMI jumped to 54.1 from 51.7. The one weak spot is employment, which fell for the second time in three months as firms held back from hiring while the regional conflict continues.

What the August 2026 PMI shows

The PMI is compiled by S&P Global from a monthly survey of purchasing managers at around 1,000 non-energy private sector companies in the UAE. Any reading above 50 signals that business conditions improved compared with the previous month; anything below 50 signals deterioration. The headline index is a weighted average of five components: new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%). The August data were collected between 12 and 24 August 2026.

The trajectory over the summer matters as much as the headline. In June the index fell to 50.8, its weakest level in more than five years and a whisker above the neutral line. July brought a rebound to 52.7, a four-month high, and companies returned to hiring. August’s 55.3 confirms that July was not a one-off: growth accelerated for a second month and reached its strongest rate since December 2024.

Behind the headline, this is how S&P Global describes the August picture component by component:

Orders, exports and output

Demand is the engine of the August reading. Companies reported a substantial increase in new work, the joint-quickest since March 2024, and linked it to better customer activity as the economic caution arising from the Middle East conflict continued to ease, steadily if not completely. Export demand rose for a second month in a row, reversing the declines recorded throughout the second quarter of 2026.

Output growth followed and reached a six-month high. Beyond bigger order books, firms attributed the rise in activity to progress on ongoing projects, clients migrating to digital services and fewer logistics challenges than earlier in the year. The flip side was a rapid build-up of unfinished orders: the pace of new business reportedly left some companies with insufficient time to scale up operations, which is where the employment story comes in.

Inventories and supply chains: the localisation shift

The most striking change from earlier in 2026 is on the supply side. Stocks of purchases rose at the sharpest rate in nearly three years, after a muted stock-building trend in recent survey periods. Two things made this possible: a sharp increase in purchasing activity, and fewer sourcing problems as more firms leaned on local vendors. Supplier performance improved in August, helped by greater trade flows and faster deliveries from nearby suppliers.

David Owen, Principal Economist at S&P Global Market Intelligence, put it this way: “UAE businesses are actively building supply chain resilience through localisation, with surveyed firms increasingly switching to domestic suppliers to help circumvent geopolitical disruptions. This strategy contributed to a further reduction in delivery times and strong purchasing growth. In addition, firms accumulated inventories at the sharpest pace in nearly three years, pointing to growing confidence in the demand outlook and efforts to limit the impact of potential future supply shocks.”

Costs and prices: relief nationwide, pressure in Dubai

Better supply conditions fed straight into costs. Input price inflation eased to its lowest since February 2026, even though companies still reported higher prices for energy, fuel, cement, steel and chemicals. Average prices charged rose modestly, the quickest increase in four months: some firms lifted their charges on the back of rising costs and stronger demand, while others pointed to price promotions and fierce competition.

Dubai moved the other way. In contrast to the UAE trend, Dubai non-oil firms recorded an acceleration of price pressures in August, with total input costs rising at the fastest rate in four months.

Employment: the one weak spot

Employment fell for the second time in three months. According to the survey, ongoing uncertainty surrounding the regional conflict and its macroeconomic impact made firms hesitant to recruit, even as backlogs of work grew. Owen described the decline as “reflecting a degree of hesitancy to commit to long-term capacity expansion”. This reverses July, when companies had returned to hiring after one of the sharpest employment contractions since the pandemic in June.

Expectations for the year ahead nonetheless improved to their highest level since April. Optimism was linked to improving sales trends, construction projects and hopes for an easing of regional tensions. Owen’s overall verdict: “The UAE’s non-oil economy has shifted decisively into a higher gear, with August’s PMI reading of 55.3 marking the fastest improvement in business conditions since December 2024 and suggesting that firms are adapting more effectively to the current market environment.”

Dubai PMI: 54.1, six-month highs for output and new orders

Dubai’s non-oil private sector saw stronger growth midway through the third quarter. The Dubai PMI rose sharply from 51.7 in July to 54.1 in August, signalling a robust improvement in business conditions. Companies highlighted an uplift in client spending and an improvement in export trade, and both output and new order growth surged to six-month highs.

The emirate also recorded the quickest rise in input stocks since December 2017. Employment declined slightly, contributing to capacity pressures, and, unlike the national picture, input costs rose at the fastest rate in four months.

What the August PMI means for your business plans

For a company already operating in the Emirates, or planning to set one up, the August survey changes the planning assumptions in four ways.

• Demand is recovering across the board. New orders rising at the joint-fastest rate since March 2024 and exports growing for a second month mean the June slowdown is behind the non-oil economy. Sales plans for the second half of 2026 that assumed flat demand are worth revisiting.
• Capacity, not orders, is the bottleneck. Backlogs are building because firms are not hiring at the pace of new business. A company that can bring staff on board quickly, with work permits and residence visas processed in advance, delivers on the orders its competitors cannot. Our guide to UAE work visas and residency covers the timelines.
• Restocking is back, and it is local. The sharpest inventory build in nearly three years is being sourced increasingly from domestic suppliers, in S&P Global’s words. That favours businesses with a UAE licence, a local corporate bank account and delivery capability inside the country.
• Pricing power is modest. Cost relief at the national level is real, but competition is fierce and Dubai’s input costs are rising again. Margins will come from procurement and speed of delivery rather than from price increases.

Checklist for the coming quarter:

• Revisit the sales forecast against the August order data, especially for export-facing product lines.
• Map the hiring pipeline: which roles are held up by visa processing rather than by the labour market, and what the company’s establishment card and quota allow.
• Check working-capital headroom for inventory: restocking ties up cash before it turns into receivables.
• Review supplier contracts for a local option, since delivery times from nearby vendors are improving.
• Separate Dubai and other-emirate cost budgets: Dubai input costs are rising at a four-month high while the national trend eases.

How Atlant Capital can help

Atlant Capital works with founders and companies that want to be positioned for exactly this kind of demand cycle. We handle company setup on the mainland and in UAE free zones, including the choice of jurisdiction and business activities, the licence and the Dubai Unified Licence; corporate bank account opening, with the compliance file prepared in advance so that a new entity can pay local suppliers from day one; and work visas and residence permits for the team, so that hiring is not delayed by paperwork when the order book fills up. Bookkeeping, VAT and corporate tax filings are handled by licensed accounting firms from our partner network.

For the background to the August numbers, see our analysis of the July 2026 PMI, when hiring returned, and our note on how Dubai issued 58,337 new business licences in the first half of 2026.

Conclusion

August 2026 delivered the strongest PMI reading for the UAE’s non-oil economy in 20 months: 55.3, with new orders at the joint-fastest pace since March 2024, exports growing again, inventories rebuilt on local supply chains and cost inflation at a six-month low. Dubai followed at 54.1. The caveats are specific rather than general: employment is still falling, backlogs are building, and Dubai’s costs are rising. For businesses in the Emirates, the message is to plan for demand and solve for capacity.

FAQ

What was the UAE PMI in August 2026?

The seasonally adjusted S&P Global UAE PMI rose to 55.3 in August 2026 from 52.7 in July, according to the release of 3 September 2026. A reading above 50 signals growth compared with the previous month. It was the fastest improvement in non-oil private sector business conditions since December 2024, and the second consecutive month of accelerating growth after June’s 50.8.

What was the Dubai PMI in August 2026?

The Dubai PMI rose from 51.7 in July to 54.1 in August 2026. Output and new order growth reached six-month highs on stronger client spending and better export trade, and input stocks rose at the quickest rate since December 2017. Employment fell slightly and, unlike the UAE as a whole, input costs in Dubai rose at the fastest rate in four months.

Why did UAE non-oil employment fall in August 2026 if demand was growing?

S&P Global reports that ongoing uncertainty surrounding the regional conflict and its macroeconomic effects made firms hesitant to recruit, so employment fell for the second time in three months even though new orders rose at the joint-fastest pace since March 2024. As a result, unfinished orders built up rapidly and some companies said they had insufficient time to scale up operations.

What drove the August 2026 improvement: demand or costs?

Both. New business rose at the joint-strongest rate in more than two years and exports grew for a second month, while faster deliveries from local suppliers eased input cost inflation to its lowest since February 2026. Firms also rebuilt inventories at the sharpest pace in nearly three years, and business expectations for the year ahead reached their highest level since April 2026.