Non-oil businesses in the UAE continued to grow in February owing to an increase in output due to new orders and market demand, a business survey revealed on Tuesday.  

Businesses reported the sharpest rise in output levels since the middle of 2019, according to the survey.

The S&P Global UAE Purchasing Managers' Index (PMI) picked up from 56.6 in January to 57.1 in February, signalling a sharp upturn in overall operating conditions.

The latest PMI data indicated the fastest upturn since June 2019, as 38% of monitored firms noted a month-on-month increase due to higher new business, stronger client activity, greater marketing and development work.

"One of the PMI's largest components, the Output Index, rose to its highest level since June 2019, pointing to a rapid expansion of business activity as firms look to take full advantage of strong market growth and maintain a competitive edge," David Owen, Senior Economist at S&P Global Market Intelligence, said.

However, capacity pressures were apparent in February. Disruption to shipping lines in the Red Sea began to feed through into local supply chains. Vendor performance improved to the least extent for seven months, while volumes of backlogged work rose at the sharpest rate for almost four years, according to the PMI survey.

"Overall supply chain performance improved at the weakest rate since last July, but nonetheless still improved, suggesting that the impact on vendors is so far limited," Owen added.

Recruiting activity paced up in February to support workloads and offset backlog growth. Employment levels expanded to the fastest degree since last May.

Companies are positive about the year ahead. "Business expectations suggest that companies are positive about the year ahead, although concerns of a crowded market remain and appeared to dampen sales growth further," Owen added. 

(Reporting by Seban Scaria; editing by Daniel Luiz)