Saudi Arabia Purchasing Managers’ Index (PMI) rose to 57.5 in November, the highest reading since August 2015.
Output and new orders rose at the fastest rate in 2017 last month, with firmer export demand contributing to overall new orders growth. However, employment growth was modest, with the employment index easing to 50.7 in November, only slightly above the neutral 50-level.
Input cost inflation slowed from October, and was driven largely by the higher cost of purchases. Staff costs were only marginally higher in November, and wage inflation year-to-date has been weaker than in 2016. Despite higher input costs, average selling prices were unchanged in November, with firms citing competitive pressures.
Purchasing activity and inventories rose sharply last month, with firms responding to stronger demand. Businesses remained optimistic about prospects over the coming year overall, although the degree of optimism was slightly weaker than in October. Higher oil prices likely contributed to the broadly positive business sentiment in Saudi Arabia over the last couple of months.
“Overall the PMI survey was much better than we had expected given the political developments at the start of last month, and supports the view (reflected by several political analysts) that the majority of businesses in the Kingdom view the anti-corruption drive as a positive development for Saudi Arabia’s economy, notwithstanding the increased near-term uncertainty,” said Khatija Haque, Head of MENA Research at Emirates NBD.
The strong rise in output and new orders in October and November also bode well for Q4 non-oil GDP growth.
Egypt returns to growth
The Egyptian non-oil private sector returned to expansion in November, ending a 25-month sequence of deterioration. Renewed growth of output, new orders and stocks of purchases all contributed to the latest improvement in business conditions. Furthermore, foreign demand for Egyptian-produced goods and services reached a record high. On the price front, rates of both input cost and output price inflation softened, falling below their respective long-run averages.
“Egypt’s PMI readings turned positive in November, signalling an expansion in the non-oil sector for the first time in over two years. This suggests that the wide-ranging economic reforms embarked upon in November 2016 as part of an IMF-sponsored programme are beginning to bear fruit. Strong sentiment towards future prospects chimes with our view that the Egyptian economy will continue to strengthen over the coming quarters,” said Daniel Richards, MENA Economist at Emirates NBD.
At 50.7 in November, Egypt PMI rose from 48.4, and signalled an end to the downturn recorded over the past 25 months. The improvement was the strongest recorded since August 2015, albeit only slight overall.
Output in the Egyptian non-oil private sector grew in November, ending a 25-month sequence of deterioration. Panel members linked the rise in business activity to higher inflows of new orders.
Data showed demand for Egyptian-produced goods and services increased during November. Inflows of new work returned to growth, recording the fastest expansion for 27 months. Furthermore, demand from foreign sources rose at the fastest pace since the survey began. According to anecdotal evidence, the improvement in new export orders was linked to an upturn in demand from neighbouring economies.