The UAE’s purchasing managers index (PMI) hit a four-month low in March as export demand softened, but the region’s second-largest economy remained expansionary.

The Gulf state recorded a PMI of 54 last month compared with 55.5 in February to its lowest level since November 2012, according to the UK’s HSBC.

“Though this may suggest that the recovery in UAE growth paused for breath in March, the print remains clearly in expansionary territory with the underlying data suggesting that the surge in non-oil sector activity apparent since mid-2012 is intact,” 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 gained half a point for the second month running, hitting 59 points in March to reach a five-month high.

“March PMI data strongly suggest that Saudi Arabia’s strong growth story is maintaining momentum, boosted by rising public spending and a now well-established upturn in domestic financing,” says Williams.