A sharp rise in output and new orders in the UAEs non-oil sector sent the Purchasing Managers Index (PMI) to 54.5 in March, up from 53.1 in February.
This is the highest index performance recorded in four months, notably due to an increase in new work in spite of renewed fall in exports.
However, in spite of the encouraging performance in March, the average PMI for the first quarter of 2016 still indicates a further slowdown in the countrys non-oil sector relative to previous periods.
The solid growth in output and new orders in the first quarter [of 2016] suggests that domestic demand is holding up well despite the headwinds of a strong US dollar and low oil prices, said Khatija Haque, head of Mena Research at Emirates NBD, which generates the monthly PMI.
The UAE PMI report in March further indicated that both employment and input stocks remained in growth territory although the respective rates of expansion have somewhat eased. Input costs rose only modestly, cited the report, which means companies were able to reduce their tariffs amid increased competition.
The sharp rise in output is being attributed to enhanced marketing efforts and incoming new projects. While new business increased at a faster pace, the expansion is understood to be subdued relative to the long-term trend, highlighting weakness in international demand. New export orders also fell for the first time in six months, although only marginally, according to the report.
In contrast to the states overall private sector performance however, the private sector index in Dubai fell to 48.9 in February, marking the first time in five years that the index fell below the neutral score of 50, effectively ushering in the onset of a downturn.