DUBAI, June 5 (Reuters) - New business activity driven largely by domestic demand continued to support non-oil business activity in the United Arab Emirates in May, a survey showed, although the pace of growth eased from the previous month.

The seasonally adjusted S&P Global UAE Purchasing Managers' Index fell to a three-month low of 55.5 in May, from 56.6 in April, but remained above its long-term average.

The sub-index for New Orders slipped to 58.3 last month from 59.9 in April but continues to indicate a sharp pace of growth in new business, led by domestic orders as export sales were mostly flat.

"Despite slipping from April's six-month high... the latest headline reading of 55.5 signalled a robust improvement in business conditions, driven by marked upturns in activity and new work," said David Owen, senior economist at S&P Global Market Intelligence.

"Moreover, rising new work intakes and strengthening demand conditions gave firms greater confidence for the year ahead."

The output sub-index stood at 62.3 in May, showing the sharp pace of growth in non-oil business activity, despite a slight easing from the 62.7 recorded in April, while employment growth accelerated slightly from the previous month.

The UAE began rolling out a 9% business tax from June 1, with exemptions for the many free zones which power its economy, as the oil producer seeks to boost non-oil revenue and remain a regional commercial hub.

Despite this, surveyed firms indicated strong confidence in future activity over the next 12 months.

Reporting by Rachna Uppal; Editing by Toby Chopra

Our Standards: The Thomson Reuters Trust Principles.