Dubai: Saudi Arabia’s non-oil private sector growth continued in September, but the rate of improvement in business conditions was much reduced compared to previous years. The main reason for this was slower growth of new business.
Emirates NBD Saudi Arabia PMI data for September showed that the rate of hiring eased, although output rose sharply.
“Saudi Arabia’s PMI eased only slightly in September, on weaker new order growth. However, the average PMI for the third quarter of 2016 points to a faster rate of expansion in economic activity compared to the first half of this year. Recent announcements on spending cuts in the Kingdom are likely to weigh on household consumption and consumer confidence however, as we head into the fourth quarter,” said Khatija Haque, Head of Mena Research at Emirates NBD.
The Kingdom’s non-oil private sector businesses took on extra staff for the 30th month in a row during September. The rate of hiring was only modest.
General economic downturn
Egypt’s non-oil private sector firms reported ongoing difficulties in September, as business conditions worsened for the 12th straight month. Chief among these issues was falling output and the rate of decline accelerated. Client demand deteriorated both at home and abroad, linked to the general economic downturn and spiking inflation.
High prices continued to hamper the sector as a whole. Currency weakness relative to the dollar and a newly introduced value added tax (VAT) led to faster rises in both input and output prices. This contributed to a lack of new work, and also motivated a number of companies to cut back on staff. Employment fell at a similar pace to August’s survey record.
“The introduction of a value added tax appears to have played a role in curbing output and pushing inflation higher in September. While many of the economic reforms expected in the fourth quarter will ultimately prove beneficial for long-term stability, in the near term they could result in a further deterioration in business conditions for the private sector,” said Jean-Paul Pigat, Senior Economist at Emirates NBD.
