Saudi Arabia’s non-oil private sector saw the fastest improvement in business conditions in June for 19 months amid further increases in new business from both domestic and foreign markets, said Emirates NBD in its latest Saudi Arabia PMI survey.
The rate of overall new order growth quickened from May to a three-month high. Meanwhile, business confidence among non-oil private sector firms eased to the lowest in ten months but nonetheless was strongly positive.
Commenting on the Saudi Arabia PMI survey, Khatija Haque, head of Mena Research at Emirates NBD, said: “The June survey data showed little change from May’s readings, with the headline PMI only marginally higher on the back of slightly faster new work growth. While both output and new work increased at a solid rate in June, there was almost no change in private sector employment. Firms remained optimistic about future output, although this component of the survey declined to the lowest level since August 2018, possibly reflecting heightened geopolitical tension in the region.”
Key findings:
• Headline PMI rises to a 19-month high of 57.4
• New business increases at the fastest pace in three months
• Business confidence at a ten-month low
The headline seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index™ (PMI®) – a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy – posted 57.4 in June, up from 57.3 in May and the highest since November 2017.
In contrast to the headline PMI, output growth in Saudi Arabia’s non-oil private sector slowed to a three-month low during June. That said, the rate of expansion remained sharp and was broadly in line with the long-run series average.
The latest survey data saw an acceleration in new business growth at businesses in Saudi Arabia’s non-oil private sector. The rate of expansion was marked, with June’s improvement the fastest in three months. Furthermore, inflows of new orders from abroad rose for the fourth month running.
Partly due to an increase in new order inflows, non-oil private sector businesses expanded their payroll numbers during June. However, the rate of job creation was marginal and slowed from May’s four-month high.
June saw a second consecutive monthly rise in average cost burdens faced by non-oil private sector businesses. Despite this, the rate of inflation was fractional and eased from May. Anecdotal evidence from respondents indicated that price competition among suppliers had acted as a restraint on cost burdens.
Reflecting stronger new business growth, firms ramped up their input buying at a marked pace during June. However, the rate of growth eased from May’s 17-month high.
Meanwhile, stocks of purchases increased once again during the latest survey period, thereby extending the current sequence growth to 14 months. Respondents attributed the rise in pre-production inventories to greater customer demand.
Finally, business confidence towards future growth prospects was strongly optimistic during June. Despite easing to a ten-month low, just under 39% of respondents forecast greater business activity over the coming 12 months. Anecdotal evidence suggested that firms were optimistic towards the impact of forthcoming business investment and new project wins.
TradeArabia News Service
03/07/2019
