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Companies in the region are anticipating a slowdown and are streamlining their operations. So the government has stagnated the creation of new jobs. (Government measure)

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“Inflation and cost of living are other concerns, coupled with stagnant salaries that have contributed to the exit of expatriates.” This will cause cyclical unemployment due to business cutting back on hiring

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Due to recession, the unemployment rate has increased which will cause the GDP of the country to decrease as people are not spending as much and production capacity is underutilized. The article expects the economy to recovering in 2017 which may cause the price level to increase causing inflation.

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The PMI of businesses across UAE, which measures economic health of manufacturing sector has dropped to its lowest since march 2012. However, their economy is still expanding. This means that the GDP of UAE is decreasing. The oil prices in UAE dropped by USD$80 per barrel to USD$30 per barrel. There is deflation. The government speding fell by 9.9% against the previous quarter. The government is following the Keynesian Theory as the government is by cutting expenditure when the oil prices decrease, since demand increases when prices decrease. Government thus cuts the expenditure so that the aggregate demand does not exceed the equilibrium.

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GDP

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The economies of the UAE and Saudi Arabia slowed further last month, according to monthly trackers of business activity published yesterday, as falling oil prices and a stumbling global economy hit the region.

The UAE purchasing managers' index, which surveys businesses across the country, recorded a score of 52.6 last month. While any score above 50 indicates that the economy is expanding, this is the index's lowest score since March 2012.

Saudi Arabia hit its second all-time low in two months as public spending cuts added to the effects of falling oil prices. It recorded a purchasing managers' index score of 53.9.

The kingdom cut spending rapidly in the fourth quarter of the year, trimming its budget deficit from an expected 21 per cent of GDP to an actual 15 per cent of GDP. It plans to cut spending further this year.

The oil price has fallen from above US$110 per barrel eight months ago to about $30 now, hitting state budgets and spending in a region dependent on the government for growth.

"Today's data adds to mounting evidence that the impact of lower oil prices is starting to hit home," Jason Tuvey, the emerging markets economist at Capital Economics, wrote in a research note.

"Part of the slowdown in activity in January may reflect a deterioration in sentiment in light of the latest drop in oil prices. After all, the survey took place in the middle of the month, around the same time that oil prices fell below $30 per barrel."

Khatija Haque, the head of Middle East and North Africa research at Emirates NBD, blamed the slowdown in the UAE on uncertainty about the economic outlook and low oil prices weighing on consumer and business sentiment. The strong dollar also continues to impact demand from emerging markets in particular.

The dirham, which is pegged to the dollar, rose about 10 per cent in real terms against the UAE's trade partners, according to data from the Bank of International Settlements. That has pushed up prices of real estate in Dubai, further slowing growth in the emirate.

Meanwhile, the UAE Central Bank says that the economy grew by 2.8 per cent in the fourth quarter of last year, the slowest rate since 2010, when the country was emerging from the aftermath of Dubai's 2009 real estate crisis.

The UAE government's fiscal position worsened dramatically despite the public spending cuts, Central Bank data shows.

While the government has taken moves to cut public spending, the speed of the collapse in the oil price has outpaced reductions in expenditure.

The deficit widened to Dh19.1 billion, on the back of a 23 per cent fall in revenue.

Government spending fell by 9.9 per cent against the previous quarter.

Budget cuts have focused on cuts to infrastructure and subsidies. Spending on public sector salaries rose by 27.3 per cent in the third quarter against the year-earlier period.

The worsening outlook for the global economy - with Europe on the edge of deflation, the low oil price hitting US growth and China's manufacturing economy slowing to a crawl - has economists worried that the region will suffer further in the coming year.

abouyamourn@thenational.ae

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Lower oil prices hit UAE and Saudi Arabia economies, latest PMI survey shows

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The economies of the UAE and Saudi Arabia slowed further last month, according to monthly trackers of business activity published yesterday, as falling oil prices and a stumbling global economy hit the region. The UAE purchasing managers' index, which surveys businesses across the country, recorded a score of 52.6 last month.

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There is a 35% drop in the online job postings due to the uncertainty surrounding the new oil production cuts by OPEC and the strengthening of the US Dollar. Hence, the UAE businesses are taking a cautious approach to growing their workforce. The business also face the problem of structural unemployment as employers state that their biggest challenge when recruiting is the lack of suitable candidates. An example of structural unemployment would be that companies face competition for talent from rival firms. Moreover, some of the causes of frictional unemployment is due to some professionals feel that there is no scope of progression within their current firms so they rather relocate and change jobs.

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The banking and finance sector witnessed the biggest decline in new opportunities. Pictured, the Dubai International Financial Centre. Satish Kumar / The National

The number of online job postings in November dropped by 35 per cent in the UAE, with the banking and finance sector witnessing the biggest decline in new opportunities, according to a new survey by listings site Monster.

The firm said that the percentage of recruitment roles posted in banking, financial services and insurance dropped by 39 per cent year-on-year, meaning that it performed marginally worse than the hospitality sector, which witnessed a 37 per cent drop in job listings.

The best-performing sector was education, but even this witnessed a 1 per cent year-on-year decline in new job listings.

Despite a slight increase in the number of jobs listed in October, the rate of new jobs on offer has generally been in decline since March last year.

However, Monster.com's managing director for the Middle East and Asia Pacific regions, Sanjay Modi, predicted that 2017 would be a better year for jobseekers in the UAE.

"With the uncertainty surrounding the new oil production cuts by Opec and the strengthened US dollar, it appears that UAE businesses are taking a cautious approach to growing their workforce, however, this is likely to change in 2017 as confidence is restored with more stable market conditions," he said.

"While online hiring activity in the UAE currently remains very low, the movement of employees and employee talent gaps will create more opportunities but higher competition for job seekers, making it important for job seekers to find ways to stand out."

In the wider Middle East region, online recruitment opportunities fell by 44 per cent, with hospitality and banking and finance once again proving to be the among the worst-performing sectors.

New job listings in hospitality declined by two-thirds (66 per cent), while roles in banking, financial services and insurance dropped by 61 per cent.

Retail, trade and logistics roles fell by 64 per cent. The consumer goods/FMCG, food and textiles sector reported an 8 per cent increase in job listings.

Last month, recruiter Hays said that 15 per cent of employers admitted that their biggest challenge when recruiting new staff is a lack of suitable candidates.

Respondents to its latest salary survey, the full results of which are due to be published this month, highlighted unrealistic salary expectations and competition for talent from rival firms were its other two main challenges when it comes to hiring new staff.

Meanwhile, those seeking new jobs listed career development, the benefits package, organisational culture, work-life balance and job security as their five most important influencing factors when considering employment with a company.

More than half (55 per cent) of professionals said there was no scope for progression within their current firm, and the same number said they were considering switching jobs in 2017.

Chris Greaves, the managing director of Hays Gulf Region, said: "While it is not easy, particularly during more challenging market conditions, organisations must review their approach to both talent attraction and retention. They need to understand how their offerings compare to others in the market and identify what they can do to stand out from the crowd."

mfahy@thenational.ae

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UAE online job postings down 35% but improvement expected

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The number of online job postings in November dropped by 35 per cent in the UAE, with the banking and finance sector witnessing the biggest decline in new opportunities, according to a new survey by listings site Monster.

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Due to the economic downturn , hence causing a decrease in the crude prices. The Gulf government is then forced to decrease spending and delay projects.  This problem of the decreasing oil prices are affecting Dubai in a way that the demand for Dubai's exports to these areas are weakening

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A large GMC 4x4 sits with deflated tyres. Like the Range Rovers and Camaro GT parked nearby, it is covered in a thick layer of sandy dust - one of more than 30 apparently abandoned cars lining the bays of a floor of a multistorey car park at Dubai airport.

The vehicles are testament to the rising number of "skips" afflicting Dubai - indebted expatriates who have left the city state rather than face debtors' prison as an economic downturn squeezes the business and finance hub.

Throughout the oil-rich Gulf, the slump in crude prices is forcing governments to slash spending and delay projects, while private companies shed staff and, in some cases, shut down.

"There is a material slowdown under way, and it still has some way to run," said Simon Williams, chief Middle East economist at HSBC. "Low oil prices are part of the problem. Dubai may not be an oil producer, but it exports its services to the rest of the Gulf where demand is weakening."

Abandoned vehicles were a totemic image of Dubai's last crisis in 2009, when the emirate was forced to turn to its oil-rich brother emirate Abu Dhabi, capital of the United Arab Emirates, for a $20bn bailout.

This year's slowdown has not reached the crisis-levels of that recession, and Dubai is less affected than other oil-dependent peers, such as Qatar or Abu Dhabi. But the emirate is still burdened with debts of around 140 per cent of gross domestic product and faces loan and bond repayments of $22bn through 2018.

And the government's problems are aggravating the woes of struggling private companies. Between the third quarter of 2015 and the first three months of this year, 237 small business owners left the UAE as increasingly late invoices forced firms to miss their debt repayments, according to Coface, a credit insurance firm that monitors the trade credit of 20,000 UAE companies.

One consequence is abandoned cars at the airport. Bouncing cheques and bankruptcy are treated as criminal offences in Dubai, causing many indebted expatriates to dump their vehicles and other possessions and jump on a flight out of the emirate rather than risk jail.

Cheeky graffiti scrawled on to the dusty windscreens of deluxe Range Rovers abandoned at the airport reflect the darker realities of modern day Dubai. "I don't have money," reads one message. "I do," retorts another. "Sell the car and get money," reads a third message.

"These runaway cases are triple . . . what we used to have," said Massimo Falcioni, Middle East chief executive at Coface.

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In metals and construction, the sectors hardest hit by the slowdown, companies are facing four-month delays in payments from clients, he said, meaning they have to wait eight months on average to receive their cash.

Mr Falcioni said the number of bankruptcies is stabilising as weaker companies have already folded, and he predicts better prospects ahead as the emirate gears up to spend on infrastructure in preparation for hosting the World Expo in 2020.

But families are still leaving the emirate as the high cost of living - including rent and schooling - makes life too difficult for many white-collar workers as the economy slows.

"New job creation has been stagnant as companies in the region are bracing for a slowdown and they are streamlining their operations," said M.R. Raghu at Markaz, a Kuwaiti investment bank. "Inflation and cost of living are other concerns, coupled with stagnant salaries that have contributed to the exit of expatriates."

MoveSouq.com, the UAE's largest home services online platform, has seen the volume of requests for moves overseas doubling compared with the same time last year.

Bana Shomali, the company's founder, said the increase was due in part to the natural growth of her young business. But she added: "We've noticed that international moving has grown much faster than other types of transactions."

Job losses are being felt across some of Dubai's most important sectors - banking, tourism, construction and oil services.

Property values have been on the slide, with values dropping by about a quarter since their most recent peak in 2014. Prices are still far above their 2011 trough, but could decline a further 15 per cent through 2017, according to real estate consultancy Phidar Advisory.

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Jesse Downs, Phidar's managing director, said the strong dollar - with the dihram pegged to the greenback - is adding to the emirate's travails.

"Until, and unless, the US dollar weakens, liquidity improves, or some other unforeseen exogenous shock occurs, the market will remain weak," she said.

Many in the emirate are waiting to measure whether autumn will bring an economic rebound.

However, teachers say newer, more expensive international schools set up during recent boom years are finding it hard to fill classes, suggesting higher-paid professionals are also being squeezed.

Innoventures Education, which runs established private schools in Dubai, says its numbers are holding up but cancellations for overseas relocations out of the emirate have risen by 10 per cent.

"We are also finding new applications coming in more slowly than last year," said Poonam Bhojani, chief executive.

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Dubai businesses feel squeeze as economic downturn bites

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A large GMC 4x4 sits with deflated tyres. Like the Range Rovers and Camaro GT parked nearby, it is covered in a thick layer of sandy dust - one of more than 30 apparently abandoned cars lining the bays of a floor of a multistorey car park at Dubai airport.

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- Inflation, GDP,  Business Cycle and unemployment rate