Dubai: September data signalled strong growth in Saudi Arabia’s non-oil private sector, with sharp expansions in output and new orders being key contributors to the most recent improvement in operating conditions.
At the same time, input price inflation continued to soften, according to the latest Emirates NBD Purchasing Managers’ Index (PMI) survey. Moreover, firms generally reduced their output charges to increase competitiveness.
Meanwhile, employment continued to increase, albeit only marginally. The headline (PMI) edged down marginally from 55.8 in August to 55.5 in September. Although the reading continued to signal a sharp improvement in the health of the sector, the headline PMI continued to score below the long-run average.
September data signalled sustained growth in output across Saudi Arabia’s non-oil private sector. Though sharp, the rate of expansion remained slower than the historical average.
Growth in new orders softened slightly during September. In line with the trend for overall new business, new export order growth eased, according to the latest survey.
Employment growth across Saudi Arabia’s non-oil private sector remained slight overall and matched that recorded in August. The increase extended the current sequence of job creation to 42 months. Companies that noted an increase in payroll numbers linked this to rising output requirements.
“The PMI for Saudi Arabia has been relatively stable in [the third quarter], signalling a solid expansion in non-oil sector growth last quarter,” said Khatija Haque, head of Mena Research at Emirates NBD.
“While output and new order growth has remained strong, external demand was softer compared to a year ago, as was employment growth. The announcement of key reforms and a successful $12 billion [Dh44 billion] debt issue in late September should have a positive impact on both sentiment and business activity in the coming weeks.”
Egypt
The downturn in the Egyptian non-oil private sector was extended to September, but companies were strongly optimistic towards growth prospects. Worsening business conditions stemmed from ongoing reductions in new orders and output, whilst job shedding accelerated to the fastest in eight months. Furthermore, new export orders declined for the first time since March. On the price front, rates of input cost and output charge inflation eased.
At 47.4 in September, the September PMI fell from 48.9 in August to the lowest reading in three months. The figure signalled a solid deterioration in the health of the Egyptian non-oil private sector.
A key contributor towards the latest deterioration in business conditions was a marked and accelerated contraction in Egyptian private sector output. New orders slipped further in September, indicating subdued demand for Egyptian-produced goods and services. That said, the rate of contraction remained moderate overall and slower than its long-run average.
Inflows of new business from abroad fell sharply in September, recording a contraction for the first time since March. Many panellists reported that political and economic uncertainty in neighbouring countries hampered foreign demand.
