Private-sector business growth in the Emirates rose to its highest level in nearly a year last month as new orders and employment picked up.
A rise in sales volumes, which also climbed at their fastest pace in 11 months, helped to underpin the strong reading, according to the HSBC's purchasing managers' index (PMI).
"It's a good reading and, given the weakness PMIs are showing elsewhere in the world, the pick-up in the new orders and employment scores is particularly encouraging," said Simon Williams, the bank's chief economist for Middle East and North Africa.
The headline indicator reached 53.8 points last month, up from 53.5 in April. A reading above 50 reflects expansion.
The rise comes despite concerns the UAE economy may feel the pinch from slowing growth elsewhere.
Falling oil prices, the euro-zone crisis and China's cooling economy prompted Sultan Al Mansouri, the Minister of Economy, to forecast a lower GDP growth rate of about 3 per cent this year. The economy expanded 4.2 per cent last year, he said.
But the latest PMI results suggest companies in the non-oil sector are still seeing brisk trade.
Firms surveyed indicated that market conditions were relatively buoyant, with advertising, promotional work and marketing all reported to have helped to win new contracts last month.
The domestic market was considered an important source of new orders. The rate of export sales growth faltered, however, as some businesses reported weaker global demand.
A sharp rise in companies' order books prompted many of them to raise production volumes, although production growth slipped from the previous month's high and below the level for new orders.
In a further indicator of the strength of activity, backlogs of work rose for the third month in a row.
To help to cope with demand, companies took on more people. Job creation climbed for a fifth successive month, at the sharpest pace since July, the results showed.
But the survey also showed pressures facing companies' margins failed to ease last month.
Rising salaries and purchase costs led to a steep uplift in input prices. Extra demand for raw materials and an increase in oil-related goods' costs were blamed for the rise. But, as in previous months, firms did not fully pass on the added costs.
The rate of output inflation rose at its fastest for seven months but was still well below companies' outgoings.
The upward trend of business activity growth may not be sustainable in the months ahead, HSBC warned.
"The UAE's reliance on external demand and foreign funding, though, and the limited fiscal stimulus that's in place, mean it will be hard for the economy to build momentum, particularly as we move into the hot summer months," said Mr Williams.
Record government spending in Saudi Arabia has helped to quicken the pace of business expansion in the kingdom.
Last year, King Abdullah announced a US$130 billion (Dh477bn) package of spending on public-sector wages, housing and other areas of infrastructure.
The kingdom's PMI index was 60.39 last month, up from 60.42 in April.
