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Dubai: Saudi Arabia’s headline Purchasing Managers’ Index (PM) rose for the second month running to 55.2 from 53.8 in October, driven by strong output growth in the non-oil private sector.

The latest reading was the highest since December last year, although it still signalled a rate of improvement in business conditions below the average over the survey’s nine-year history.

Output growth recovered in November after having slipped to a six-month low in October and was second quickest observed in 2018 so far. The main impetus continued to come from the domestic market, with new export orders rising only marginally and at a much slower rate than total new business.

“Both output and new orders increased at a faster rate in November, and while new export order growth was firmer in November than it has been in recent months, it remained sluggish,” said Khatija Haque, head of MENA research at Emirates NBD. “The recovery in new orders thus likely reflects stronger domestic demand.

“However, some of the rebound in new order growth appears to be on the back of price discounting as well as increased marketing.”

Firms surveyed indicated that competition for new work was strong, and as a result, selling prices were marginally lower on average last month. They also indicated an increasing focused on cost-savings. As a result, expansion in both employment and purchasing activity slowed in November, despite stronger new order growth.

Input costs were broadly unchanged in November after declining slightly in October. There was little evidence of wage inflation, with the staff costs index at 50.2 in November.

“Firms remained strongly optimistic about their output in the coming year, citing planned new products, increased marketing and more competitive prices; however, the “future output” index slipped 2 points in November from the October peak,” said Haque.