Gulf Non-Oil Expansion
UAE and Saudi Non-Oil PMIs Show Modest Growth Despite Maritime Disruptions and Elevated Costs
UAE non-oil private-sector activity expanded only modestly in May, with the S&P Global UAE PMI rising to 52.6 from 52.1, as war-related maritime disruptions and effective constraints around the Strait of Hormuz weighed on export orders and delayed input deliveries. While output growth accelerated to a three-month high, new business increased only slightly and remained near a low point, and job creation slowed to its weakest pace since October 2025 amid elevated material and transport costs. Saudi Arabia’s non-oil private sector also improved in May, with the Riyad Bank Saudi Arabia PMI climbing to 52.8 from 51.5, supported by improving domestic demand and stabilizing supply chains. However, exports continued to contract sharply for a third straight month due to shipping disruptions, higher freight and fuel costs, and ongoing regional geopolitical tensions, leaving new order growth modest and business optimism subdued.
Key Points
In the UAE survey, input deliveries were delayed “to the greatest extent since the height of the COVID-19 pandemic in April 2020,” underlining how severe the logistics shock was beyond simply “delayed deliveries.”
The UAE report said work backlogs rose at the “slowest pace in nearly three years,” as firms found more internal capacity to clear outstanding orders; it also noted that export sales contracted again but “the pace of decline eased markedly.”
Despite the operational bottlenecks, UAE firms stayed optimistic: the article linked year-ahead sentiment to “broader economic resilience,” citing 2025 UAE non-oil GDP growth of “6.8 percent” (and overall GDP growth of “6.2 percent”).
For Saudi Arabia, the Riyad Bank PMI discussion added a price dynamic: “Elevated input costs kept output prices rising sharply,” though “overall inflationary pressures eased slightly from April.”
The Saudi report also provided context for the rebound: firms attributed the May output acceleration to “normalising working conditions after earlier conflict-related disruptions” and the “revival of suspended contracts.”
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