Business managers in Israel are less optimistic about the possibility of a recovery of the economy by the end of this year, according to the Ziegelman Institute Index for the state of the Israeli economy. "The index suggests that business managers in the economy believe that there will no other choice but for the government and the Bank of Israel to continue to act in support of a weakening of the shekel against the dollar in an effort to minimize further damage of industrial exports, which have already been hurt by the global economic crisis," said Ehud Ziegelman, head of research at the Ziegelman Institute for Business Consultancy and Marketing Research. The index, which is based on a survey among a representative sample of over 200 executive managers, showed that 46 percent don't expect the economy to emerge out of the recession by the end of this year, while only 42% see the start of a recovery by the end of this year. Only 14% of the surveyed managers expect growth in the number of employees while 12% expect a reduction the work force and 74% said they expect no change in the number of workers. Sector by sector analysis showed that 17% of the surveyed managers in the manufacturing sector plan to increase the number of employees compared with 16% in the services sector and 3% in the public sector. Meanwhile, UBS Investment House on Thursday raised optimism regarding a relatively early recovery of Israeli economic activity already in the third quarter of this year. "We remain more constructive regarding a relatively early recovery in Israeli economic activity than many other observers - above all the Bank of Israel - which still seems rather concerned about growth prospects," said Reinhard Cluse, economist at UBS Investment House. "Following a moderate rise in April and May, our composite lead economic indicator (LEI) for Israel showed a strong rise in June last time seen in June 2007. Given our lead indicator's three-month lead time vis-Ã -vis industrial production, the new data point strengthens our conviction that economic activity will show clearer signs of a pickup over the course of the third quarter of 2009." Last month, UBS launched the proprietary composite lead economic indicators (LEIs) for seven emerging markets countries, including Israel. The composite lead economic indicator is based on six variables including the manufacturing Purchasing Managers Index (PMI), intermediate goods imports, the Tel Aviv 100 Index, and the Bank of Israel quarterly state of the economy indicator. UBS expects the economy to contract by 0.8 percent in 2009 before returning to strong positive growth of 2.7% in 2010 which is above-consensus growth forecasts of -1.2% and positive growth of 1.6% respectively. The Bank of Israel forecast for the economy to contract by 1.5% this year and grow at rate of 1% in 2010. "Compared with many of its emerging markets peers, the Israeli economy suffers from relatively few structural problems," said Cluse. "This implies that, once the global economy [and the US economy, in particular] recovers in a more sustained manner, the Israeli economy should be able to pick up steam again relatively quickly."