Arab nations’ non-oil sectors show strong growth in February: S&P Global

• Steady expansion across the region signals progress in economic diversification efforts

Updated 3 min 51 sec ago

Nirmal Narayanan 

March 05, 2026 11:31

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RIYADH: The UAE’s non-oil private sector continued its steady growth in February, driven by improved business conditions and a rise in new orders, according to S&P Global. 

In its latest report, the financial services company revealed that the Emirates’ purchasing managers’ index stood at 55 in the second month of the year, unchanged from January and marginally down from December’s nine-month high of 55.4. 

S&P Global highlighted that any PMI reading above 50 signifies the expansion of the private business conditions, while below 50 indicates contraction.

The strong growth of non-oil business activities in the UAE aligns with the broader trend in the Middle East region, where countries are steadily pursuing their economic diversification efforts. 

Saudi Arabia recorded a PMI of 58.4 in February, with Kuwait at 51.6 and Egypt at 50.1.

David Owen, senior economist at S&P Global Market Intelligence, said the UAE report showed “another solid month” for non-oil businesses in the country, adding: “A PMI reading of 55.0 suggests that growth has remained relatively steady since its recent high at the end of last year.” 

According to the analysis, business activity growth gained momentum in February and was stronger than its long-run average of 54.4. 

Companies that took part in the PMI survey revealed that output had ramped up in response to rising levels of new business. 

The study added that improving market conditions, advertising efforts, and restrained output price pressures boosted demand levels among non-oil private firms last month.

A note of caution was sounded by various non-oil private companies, according to the report, with these firms warning that competition from domestic and foreign sources dampened growth in February. 

“The sector is not without its challenges, as highlighted by a limited level of confidence in the year ahead outlook. Firms continue to feel the pressure of intense competition, which has capped price increases,” said Owen. 

He added: “Growing cost pressures resulted in a slight acceleration in selling price inflation in February. Additionally, businesses are eager to secure new work, which contributed to a rapid accumulation of backlogged orders.”

The report further said that employment creation in the UAE’s non-oil sector remained limited in February. While some firms hired additional workers to increase their capacity, most companies kept employment unchanged.

“While robust growth in business activity indicates that the pipeline of orders should eventually be addressed, other factors such as weak job creation and administrative delays pose risks to this outlook,” said Owen. 

He added that non-oil firms in the UAE continued to report difficulties securing client payments and highlighted the necessity to implement effective policy action to address this issue. 

In the same report, S&P Global revealed that Dubai’s PMI marginally declined to a three-month low of 54.3 in February, down from 55.3 in January, indicating a slower improvement in the health of the Emirate’s non-oil sector. 

Despite this drop, the overall improvement in Dubai’s non-energy sector remained solid, driven by robust expansions in new orders and output. 

The analysis added that activity levels at non-oil companies in Dubai reportedly increased in February due to stronger demand and softer price pressures. 

The rate of increase in input prices was the softest recorded in four months, resulting in only a fractional uplift in average prices charged.

In February, non-oil firms in Dubai saw business expectations recovering to a three-month high but remained relatively subdued. 

Most of the non-energy private companies in Dubai kept their staffing levels unchanged from January, although inventory growth was supported by rising input purchasing.

Employment in Qatar’s non-energy sector rises

In another report, S&P Global revealed that Qatar’s non-oil private sector witnessed growth momentum in February, with the country’s PMI up for the first time in three months to reach 51, up from 50.2 in January. 

“The labor market in Qatar continued to thrive in February as employment in the non-energy private sector increased at a survey-record pace, and wages and salaries rose at the second-fastest rate on record,” said Owen. 

S&P Global added that the wholesale and retail sector posted a fresh record increase in jobs over the month, while the slowest recruitment growth was in construction.

Average wages and salaries also grew at the second-fastest rate on record in February, easing only slightly since January’s peak. 

The analysis further stated that the total level of business activity in the non-energy private sector economy was broadly stable in February, having eased marginally at the start of 2026. 

“The employment component was the dominant influence on the headline PMI in February. Nevertheless, outstanding business continued to increase and the 12-month outlook remained positive, with confidence holding above the post-pandemic average,” added Owen. 

Lebanese private sector witnesses further growth

An additional study by S&P Global, in association with BLOMINVEST Bank, revealed that Lebanon’s PMI in February stood at 50.5 in February, marginally down from 50.6 in January. 

According to the report, this steady momentum of the country’s private sector economy was supported by greater levels of new business, specifically from abroad. 

New order growth was sustained for the second month running in February, albeit with the pace of expansion losing some momentum. 

The financial firm added that the upturn in sales was among the sharpest on record, reflecting greater business volumes from international customers. 

For the first time since November 2023, private sector firms in Lebanon registered higher new export orders. 

“The election of a new president, the formation of a new cabinet believed to be pro-reform, boosted optimism among Lebanese businesses. However, the PMI may have eased due to Israel’s continued presence in five strategic locations, which threatens Lebanon’s security,” said Mira Said, senior research analyst at BLOMINVEST Bank. 

Private sector firms in Lebanon were also optimistic about the future outlook, mainly driven by positivity surrounding the recent elections, as well as hopes of rejuvenation of the tourism sector in 2026. 

The report added that there was a renewed expansion in purchasing activity across the Lebanese private sector, marking the quickest in 11 and a half years. 

The PMI survey also signaled an intensification of inflationary pressures across Lebanon in February, resulting in higher operating expenses and a sharp rise in purchasing costs. 

“The new government is committed to negotiating with the International Monetary Fund and to implementing a spectrum of reforms. Amid uncertainty over Lebanon’s ability to recover, some believe the country has hit rock bottom and can only improve from here,” added Said.