The UAE’s purchasing managers index (PMI) rose half a point in February, indicating that the Middle East’s second largest economy is expanding at an increasing rate.

The Gulf state recorded a PMI of 55.5 last month compared with 50 in January as current output rose two points to 56.7, its highest level since May 2011, according to the UK’s HSBC.

“New export orders also continue to accumulate despite still poor global conditions, a reflection, we feel, of the pivotal role that regional demand plays in the UAE’s goods and services trade profile,” says Simon Williams, HSBC Middle East economist.

The UAE’s PMI has recovered slowly from a dip in the second half of 2011, but has remained above 50 – the level that represents flat growth – since the start of the decade.

The PMI in the region’s largest economy, Saudi Arabia also expanded by half a point, hitting 58.5 for February.

The kingdom’s expansion is being driven by non-oil industries and robust growth in domestic demand, HSBC said.