UAE firms raise prices at fastest pace since 2011 after shipping disruption hits orders

Dubai: UAE non-oil companies raised selling prices at the fastest pace in nearly 15 years in April, after higher oil and transport costs, shipping disruption and weaker customer demand put fresh pressure on business margins.

The S&P Global UAE Purchasing Managers’ Index fell for the second month in a row to 52.1 in April, down from 52.9 in March, marking the weakest improvement in operating conditions since February 2021. The reading remained above the 50 mark that separates growth from contraction, but the pace of expansion slowed as export orders fell and domestic sales growth weakened.

The data points to a more difficult month for businesses across the UAE’s non-oil private sector, with firms facing a squeeze from both sides. Costs rose at the fastest pace since July 2024, while customers became more cautious, tourism activity softened and disruption to shipping routes linked to the Middle East conflict weighed on trade.

“The UAE non-oil private sector signalled a further loss of momentum in April, with operating conditions showing their weakest performance for more than five years,” said David Owen, Senior Economist at S&P Global Market Intelligence. “Heavy restrictions on key shipment routes resulted in a marked drop in exports, while rising cost pressures placed businesses under additional strain.”

Businesses passed on more of their cost increases to customers in April, with average prices charged by firms rising at the fastest rate since June 2011, according to the survey.

Oil and transport were the most commonly cited sources of higher input costs, while supply chain performance remained heavily constrained by transport restrictions in the Strait of Hormuz. Companies also reported higher material costs, adding to pressure on operating expenses.

“The subsequent uplift in selling prices, the fastest in nearly 15 years according to the survey data, underlined the growing inflation risks to the non-oil sector,” Owen said. “Firms are looking to limit the impact where possible, with slowdowns in purchasing and hiring growth and even some reports of wage cuts, but a broad increase in price pressures is nevertheless still likely to dampen customer spending across the economy more widely.”

That means consumers and clients could face higher prices across parts of the non-oil economy, even as businesses try to protect margins without further weakening demand.

New business continued to rise in April, but at the slowest pace in more than five years. Several firms reported new customer wins and higher demand, but others cited lower client spending and weaker tourism activity.

The pressure was more visible in export markets. New export orders fell markedly in April after shipping disruption linked to the Middle East conflict affected activity in the UAE. Excluding the height of the COVID-19 pandemic in 2020, the latest drop in foreign sales was the steepest since the survey began in August 2009.

The export weakness also fed into output. Companies continued to expand activity, supported by existing projects and infrastructure work, but the pace was considerably softer than at the start of the year.

Businesses responded to the pressure by limiting costs where possible. Input purchases rose only modestly in April, with firms citing rising costs, softer sales and supply-side constraints.

Hiring also slowed. Workforce numbers across the non-oil private sector rose at the weakest pace so far in 2026, while salary inflation fell to a 33-month low and remained only fractional. Some firms also reported wage cuts, according to S&P Global.

The data suggests companies are trying to remain active without adding too much cost at a time when demand growth has weakened and transport disruption continues to affect supply chains.

Dubai’s non-oil private sector also lost momentum in April, with its headline PMI falling to 51.6 from 53.2 in March. That was the lowest reading in 55 months and signalled the weakest improvement in business conditions since September 2021.

Output and new business growth softened again during the month, with the Middle East conflict weighing on spending and restricting supply lines. The rate of output growth in Dubai was the weakest in almost five years.

Cost pressures continued to build, driven by higher oil, transport and material prices. Dubai companies increased their charges at a rate that remained high by historical standards, although the rise was slower than in March.

Despite weaker sales momentum and rising prices, UAE non-oil firms were more optimistic about the year ahead. Output expectations rose to a three-month high in April, supported by strong business opportunities, sales pipelines and technological innovation.

“That said, the underlying strength of the non-oil private sector, highlighted by another strong increase in output, meant that companies expect growth to continue over the next 12 months,” Owen said. “Sales pipelines reportedly remain strong, while construction activity and predicted gains from AI investment were also cited as drivers of optimism.”

The April survey shows the UAE’s non-oil economy is still expanding, but at a slower pace, with businesses now managing higher costs, weaker export demand and more cautious customers at the start of the second quarter.