Seasonal factors and growing fears of impending recession in the world, following US failure to meet its debt obligations, affected business sentiments in the UAE and Saudi Arabia.

Significant decline in business orders were registered during the reporting period. This is indicated by the decline in HSBC's headline purchasing managers index (PMI) in the UAE. The PMI data is an important parameter for determining the growth activity of service and manufacturing segment.

In Saudi Arabia HSBC's headline purchasing managers index dropped to an 18-month low due to lack of orders. The decline is orders cannot be ruled out due to seasonal factors such as Ramadan and the summer holiday.

Simon Williams, chief economist of HSBC in the Mena region, said, This is the second or third month on month decline in the UAE and you have to come to the conclusion that the numbers are strongly suggesting the boost in the first half of the year is dissipating."

Major economies of the world are cooling following subdued manufacturing figures posted by the US, Europe and China.