UAE, Saudi Arabia and Kuwait Non-Oil Economies Gain Momentum in August
Stronger demand and new orders support business activity across three major Gulf economies, while hiring and cost pressures remain uneven
The non-oil private sectors of the UAE, Saudi Arabia and Kuwait recorded stronger business activity in August 2026, according to the latest Purchasing Managers’ Index (PMI) surveys compiled by S&P Global. The data point to improving demand and greater resilience across several Gulf economies, although companies continue to face different challenges related to employment, export orders and input costs.
UAE records strongest improvement since December 2024
The UAE recorded the most notable acceleration among the major Gulf economies covered by the latest survey. The seasonally adjusted S&P Global UAE PMI increased to 55.3 in August from 52.7 in July, marking the strongest improvement in non-oil private-sector operating conditions since December 2024.
New business increased at one of the strongest rates recorded in more than two years, while output growth reached a six-month high. Export demand also increased for the second consecutive month after declining through much of the second quarter.
UAE companies reported improved supplier performance and shorter delivery times. Businesses also increased purchasing and inventories, with greater use of local suppliers helping companies respond to changing supply-chain conditions. Input-cost inflation eased to its lowest level since February, according to the survey.
However, stronger business activity did not translate into higher employment. Employment declined for the second time in three months, suggesting that companies remained cautious about expanding their workforce despite stronger demand.
Saudi Arabia reaches a six-month PMI high
Saudi Arabia’s non-oil private sector also strengthened in August. The Riyad Bank Saudi Arabia PMI rose to 53.8 from 53.1 in July, reaching its highest level in six months and remaining above the 50-point mark that separates expansion from contraction.
Business activity increased at its fastest pace in seven months as companies benefited from stronger domestic demand and improving sales. Saudi businesses also increased employment for a second consecutive month.
Domestic demand remained an important source of momentum, while international orders continued to face pressure. Export orders declined again during August amid regional uncertainty, while businesses reported higher costs for materials, transportation and staffing.
The survey also showed improved business confidence. According to Riyad Bank and S&P Global data cited by Gulf News, expectations for activity over the following 12 months reached a seven-month high.
Kuwait’s non-oil sector also rebounds
Kuwait recorded another improvement in August, with its PMI rising to 53.6 from 50.8 in July. The reading represented a six-month high.
Output and new orders increased at their fastest rates since February, while export orders returned to growth as companies secured new business from customers in neighbouring countries.
The stronger workload was accompanied by a return to employment growth, with companies increasing staffing levels for the first time in six months. Purchasing activity also accelerated, helping businesses rebuild inventories.
At the same time, Kuwait faced increasing cost pressures. Input-price inflation reached a six-month high, while staff costs recorded their fastest increase of 2026.
Gulf business activity shows signs of recovery
The latest figures indicate that the non-oil economies of the UAE, Saudi Arabia and Kuwait are adapting to a challenging regional environment.
S&P Global’s regional assessment found that aggregate business activity across the GCC economies covered by its PMI surveys increased rapidly in August. New orders also rose sharply, while business confidence reached a six-month high. The UAE and Saudi Arabia were key contributors to the improvement, while Kuwait continued its recovery after disruptions earlier in the year.
Supply-chain conditions have also improved in several markets. Companies have been adapting their sourcing strategies, increasing the use of local suppliers and rebuilding inventories as delivery conditions improve.
Nevertheless, the recovery remains uneven. Qatar recorded another decline in non-oil output in August amid rising cost pressures, while export performance remained weaker in some markets.
What the data mean for Gulf businesses
The August PMI figures provide an important snapshot of the region’s private-sector economy. Stronger new orders in the UAE, Saudi Arabia and Kuwait indicate that companies are seeing improved demand, while higher purchasing activity suggests that some businesses are preparing for continued workloads.
For the UAE, the combination of stronger orders, improving exports and easing input-price inflation provides important support for non-oil businesses. Saudi Arabia continues to benefit from domestic demand, while Kuwait’s return to employment and export-order growth points to improving activity in its non-oil economy.
However, employment trends, export performance and input costs remain areas to watch in the coming months. The latest data therefore show an improving but uneven picture across Gulf economies as businesses adjust to changing regional conditions.
