The UAE’s Purchasing Managers’ Index declined to 56.6 in January from 57.4 in December, according to a new survey out on Monday.

As a result of new order growth and employment rate slowdowns, the S&P Global PMI report shows that non-oil business activity in the UAE fell to a five-month low in January.

However, the reading remained above the 50-level that divides growth from contraction.

“While the UAE non-oil economy largely continued where it left off at the end of 2023, the PMI’s dip to 56.6 in January pointed to a slight moderation of growth from the sector’s best quarterly performance in four-and-a-half years,” stated senior economist at S&P Global Market Intelligence, David Owen.

“Output and new order growth stayed above their long-run trends but softened, with the former easing to a five-month low.”

Owen added that employment growth in the UAE was at its weakest point since December 2022 as robust demand and a rise in business optimism failed to result in an increase in hiring, Arab News reports.

“Meanwhile, the disruption to supply lines resulting from the Red Sea attacks appeared to have a modest impact on the UAE non-oil sector in January, with a few firms noting delivery delays, aggregate backlogs rising, and reports of higher shipping costs by survey respondents,” the S&P economist continued.

Up to now the effect on inflationary pressures has been significant yet not severe, Owen stated, as input costs increased at a faster rate in December, yet slower than in Q3.

The survey also revealed confidence in the activity outlook for the coming year was positive and around the same as last year’s average.

Businesses forecast strong demand and sales pipelines within the UAE to fuel ongoing output growth, the Arab News report adds.

New projects and investments are also set to boost positivity.