STATIC GROWTH IN UAE

HSBC’s purchasing managers index (PMI) has delivered depressing results for employment in the Middle East with private-sector employment growth stalling in December for the first time in more than two years.

The index found 5 percent of companies taking on workers during the last month of 2011, but the same number of companies shed jobs, resulting in stationary employment growth. At the same time average wages and salaries fell – the first time they have done so since November last year.

"Employment growth has been weak for a while, and the salary trend has been weak as well," said Simon Williams, the chief Middle East economist at HSBC. "My sense is that private-sector businesses are looking at 2012 with great caution."

The figures could reflect a wider loss of momentum in the UAE economy. Non-oil business activity expanded at its lowest level in four months while banking data has shown lending exceeded deposits in November for the third month running. Export orders have also reached an 18-month low.

To some extent the UAE economy is dependent on the performance of the wider global economy and it seems likely that events and challenges being dealt with around the world have had a clear impact here. 

"UAE PMIs are unlikely to pick up pace in the short term," comments Simon Williams, addressing the results. "As well as its relatively high exposure to external headwinds, the UAE's fiscal policy is also less supportive than that of many of its neighbours."