UAE non-oil sector rises in April, but sales were impacted by heavy rain

UAE Businesses Navigate Challenges Amid Record Rainfall Disruptions

In April, the United Arab Emirates’ non-oil private sector continued its growth trajectory, although it faced significant challenges due to unprecedented heavy rainfall. This rainfall, described as the worst in the country’s history since records began in 1949, had a notable impact on business operations and sales growth across various sectors.

According to the latest data from the S&P Global Purchasing Managers’ Index (PMI), the headline index for the UAE dipped to 55.3 in April from 56.9 in March. While this marked a slowdown in growth compared to previous months, it remained comfortably above the neutral 50 mark, indicating that overall expansion persisted despite the adverse weather conditions.

One of the key areas affected by the heavy rainfall was new orders, which grew at the slowest pace since February 2023. Surveyed businesses reported disruptions to operations and a notable impact on sales growth as a result of the inclement weather. The storm, which occurred on April 16, led to major disruptions, including flooded roads and buildings, stalled transport services, and temporary closures of businesses.

Businesses in Dubai, in particular, experienced a significant loss of sales momentum as adverse weather conditions affected both business and consumer spending. The disruption caused by the heavy rainfall also contributed to a sharp rise in backlogs of work, indicating increased pressure on operating capacity.

Despite these challenges, the UAE’s non-oil private sector demonstrated resilience, with businesses citing robust domestic economic conditions and long-term expansion plans as key drivers of growth. However, intense competition for new work led to falling average prices charged for the sixth consecutive month in April.

Looking ahead, businesses remained optimistic about future growth prospects, although sentiment softened to a three-month low. Many companies expressed confidence in their sales pipelines and anticipated a swift recovery from the impact of heavy rainfall.

In response to the challenges posed by the storms, the UAE government announced several measures to support affected businesses and individuals. These include repayment deferments for personal and car loans, interest-free loans for small businesses, and a Dh2 billion aid package to assist citizens whose homes and properties were damaged by the storms.