The United Arab Emirates economy posted its most robust upswing in two years as demand continued to rally from the coronavirus crisis.

Data from the IHS Markit UAE Purchasing Managers' Index report showed employment increased at the fastest pace since January 2019, whilst a steep increase in new orders fuelled a considerable expansion in output.

However, shipment delays from Asia resulted in the longest interruptions to suppliers' delivery times since April last year, leading to a faster increase in input costs. The PMI rose from June’s 52.2 figure to 54.0 in July, indicating robust improvement in business conditions, the strongest in 24 months.

"The non-oil sector enjoyed a busy start to the third quarter of the year as firms saw the sharpest rise in new orders for two years amid soaring domestic sales and strengthening market confidence,” stated David Owen, an IHS Markit economist.

Furthermore, the future non-oil activity outlook stayed positive in July. The report added that businesses were hopeful the relaxing of coronavirus restrictions and Expo 2020 later in the year would bolster economic conditions.

Owen added: "At 54.0 in July, the headline PMI was broadly at its long-run level to suggest the economy was largely back to normal growth. That said, there were many firms reporting that output had not yet recovered to pre-Covid level.”

He went on to say that new orders from overseas were subdued in July as sales were impacted by global pandemic-related actions: “With Covid cases reaccelerating in Asia, firms also pointed to a worsening of supply chain problems. In fact, delivery times lengthened to the greatest extent since the onset of the pandemic in April 2020.”

In addition, the output and new orders indices followed the same trend last month, reaching their highest levels since July 2019. Businesses reiterated a further uptick in demand as restrictions eased: “However, on-going measures in other parts of the world led to a third successive fall in export sales during July, with firms increasingly turning to domestic clients to help recover new business. Lockdown measures also hit the supply of inputs at the start of the third quarter, particularly from Asia,” the report stated.