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Business conditions in the United Arab Emirates non-oil private sector continued to improve in April, with new business growth reaching a 20-month high, a survey showed on Tuesday, as the Gulf state’s economy recovers from the COVID-19 pandemic.

The seasonally adjusted IHS Markit UAE Purchasing Managers’ Index (PMI), which covers manufacturing and services, edged up to 52.7 in April from 52.6 in March.

This was its highest level since July 2019 and the fifth consecutive month it has held above the 50.0 line that separates growth from contraction.

“The UAE non-oil economy remains on the right track to a recovery from COVID-19,” said David Owen, economist at IHS Markit.

The index was supported by strong growth in business volumes and output. New orders grew at their fastest rate since August 2019.

“That said, the rate of improvement in operating conditions was still below the 12-year survey average, reflecting further pandemic-related disruptions for a number of businesses and sectors,” Owen said.

Surveyed firms said market conditions improved due to the rollout of COVID-19 vaccines and stronger business confidence.

The UAE – where the economy contracted 5.9% last year, according to the International Monetary Fund – has had one of the world’s fastest COVID-19 vaccination programmes.

Business expectations improved for the fifth consecutive month, according to the survey, on hopes of a continued recovery from the coronavirus crisis and stronger sales when Dubai hosts the Expo 2020 event later this year.

Despite this, employment declined in April for the third month in a row, with firms seeking to cut costs and reporting a decrease in expatriate workers.

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