DUBAI, Jan. 4 (Xinhua) -- The non-oil private sector in the United Arab Emirates (UAE) expanded in December 2017 at the sharpest pace in past 34 months, Emirates NBD, UAE's second largest bank, said Thursday.

The Dubai-based lender said in a statement that the headline purchasing managers' index (PMI), a survey-based composite indicator designed to give an overview of operating conditions in the UAE non-oil private sector, rose to 57.7 in December from 57.0 in November, marking the sharpest expansion in new business since February 2015.

Khatija Haque, Head of MENA Research at Emirates NBD, said "the introduction of VAT (value-added tax) in January 2018 has spurred activity in the fourth quarter of 2017, which is in line with our expectations."

On Jan. 1, 2018, the UAE along with Saudi Arabia introduced a 5-percent VAT on most goods and services except school fees, transportation and residential housing. The introduction of the indirect tax marked the first in the history of the UAE, a major oil supplier.

Nevertheless, Haque added "employment and wage growth has been relatively muted, not just in December but for 2017 as a whole."

Input prices continued to increase during last month, in line with the trend seen since June. On the contrary, output charges fell in December.

In terms of inflation, consumer prices fell for the fourth month running.

Meanwhile, new export orders rebounded with the strongest growth rate recorded in nine months. And demand from neighbouring Gulf Arab countries also picked up in December, said the Emirates NBD.