UAE non-oil business sector maintains steady growth in February, PMI shows

DUBAI (Reuters) - The UAE's non-oil private sector growth in activity held steady in February driven by strong demand and output, a survey showed on Wednesday.

The seasonally adjusted S&P Global Purchasing Managers' Index (PMI) remained at 55.0 in February, the same as the previous month, well above the 50 mark signalling growth. The reading was also slightly above the long-run average of 54.4.

Growth in new orders softened slightly for the second consecutive month, reaching its weakest level since last October, with the new orders index slipping to 57.3 in February from January's 59.0.

Despite the strong performance, the sector faced challenges, including labour constraints and payment delays, leading to a rise in backlogs of work.

"Firms continue to feel the pressure of intense competition, which has capped price increases," said David Owen, senior economist at S&P Global Market Intelligence.

"Nevertheless, growing cost pressures resulted in a slight acceleration in selling price inflation in February. Additionally, businesses are eager to secure new work, which contributed to a rapid accumulation of backlogged orders."

Concerns about domestic and international competition also tempered business confidence, with only 10% of firms expecting increased activity over the next 12 months.

In Dubai, the UAE's trade and tourism hub, the headline PMI fell to a three-month low of 54.3 in February from January's 55.3, indicating a slower improvement in the sector although growth in new orders remained robust.

(Reporting by Reuters; Editing by Hugh Lawson)