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Saudi Private Sector Growth Loses Steam
Saudi Private Sector Growth Loses Steam

Saudi Private Sector Growth Loses Steam

Saudi Private Sector Growth Loses Steam

The Saudi Arabian non-oil private sector economy was sustained in June, but growth lost momentum. Both new orders and output increased at the weakest rates in eight months, while growth of buying levels softened to the weakest since data collection began. Concurrently, there was a renewed increase in new export orders. On the price front, cost inflation was slightly above May’s survey-record low. Subsequently, average selling prices rose.
The survey, sponsored by Emirates National Bank of Dubai and produced by IHS Markit, contains original data collected from a monthly survey of business conditions in the Saudi private sector, ameinfo reported.
Commenting on the Saudi Arabia PMI survey, Khatija Haque, head of MENA Research at Emirates NBD, said: “The average PMI for H1 2017 stood at 56.0, well above the neutral 50.0 level and signaling a faster rate of non-oil private sector growth than in H1 2016.  However, faster non-oil GDP growth this year will likely be offset by contraction in the oil sector this year, following OPEC’s decision to extend output cuts through Q1 2018.”
The three key findings are:
1. Headline index at eight-month low of 54.3
2. Weaker expansions in output and new orders, and
3. Weakest rise in buying levels in survey history.
The headline seasonally adjusted Emirates NBD Saudi Arabia purchasing managers’ index–a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy– fell from 55.3 in May to an eight-month low of 54.3 in June. This was consistent with a marked, but slower, improvement in business conditions. Moreover, the average performance of Q2 2017 (55.4) was weaker than in the opening quarter (56.7).
The overall improvement in operating conditions was supported by a sharp increase in new business wins. Favorable economic conditions, strong underlying demand and more construction projects were reported by panelists to be the key factors behind the rise in inflows of new business. That said, growth eased to an eight-month low. A two-month sequence of contraction in new export orders was followed by a modest expansion during June. Panelists mentioned that discounts helped them secure new work from abroad.
Amid reports of strong demand conditions, firms raised output further during June. The growth rate overall was slowest in eight months.
In line with the trend for output, Saudi Arabian firms increased their purchasing activity again in June. Nonetheless, the rate of growth was the weakest observed since the inception of the survey in August 2009. Greater input buying contributed to higher input stocks. Although easing to the weakest in four months, the rate of accumulation was sharp overall and above the series trend.

 

 

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