Private sector business activity in the United Arab Emirates hit a 20-month high in March as new orders rose sharply despite regional unrest, a purchasing managers' survey showed on Tuesday.   

The HSBC UAE Purchasing Managers' Index (PMI), which measures the performance of the Opec member's manufacturing and services sectors, rose to 54.7 points in March, its highest level since the series began in August 2009.   

It stood at 54.3 points in February, holding above the 50 point mark that separates growth from contraction, the survey of 400 private sector firms showed.   

'The readings are positive and continue to point to a recovery that is slowly regaining speed. We'll need to wait a little longer to gauge the effect of regional unrest on the UAE's performance, however,' said Simon Williams, chief economist for Mena at HSBC Bank in Dubai.
   
'Long-term, the UAE's standing as the region's business hub is likely to be enhanced by the problems elsewhere, but over the short-term foreign investment and tourism may take a hit.'    

The UAE has escaped public protests that have shaken autocratic regimes in nearby Bahrain, Oman and Yemen. However, its government plans to spend $1.6 billion on infrastructure in less developed northern emirates among other measures.   

New orders for UAE non-oil private sector firms rose again in March to 58.0 points, the second-fastest rate in the series' history, up from 57.6 points in the previous month, due to better market conditions and higher demand, the survey showed.   

The output index slipped slightly for the second consecutive month but still signalled a sharp rise in activity, which panelists linked to new work and a better business environment.

Input prices picked up to a series record in March, showing a rise in both purchase and staff costs. Annual consumer inflation in the UAE, the world's third largest oil exporter, edged down slightly to 1.5 percent in February, matching the level from last November as the housing market remained under pressure.  -Reuters