Dubai: Saudi Arabia’s headline Purchasing Manager’s Index (PMI) declined to 53.4 in September from 55.1 in August, the lowest reading since May.
“The decline was due to softer growth in output and new orders, with new export orders contracting last month. Employment and inventory growth were also weaker in September, weighing on the headline PMI,” said Khatija Haque, Head of MENA Research at Emirates NBD.
The employment index fell to 50.7 in September, the lowest since November 2017, as nearly 97 per cent of firms surveyed indicated ‘no change’ in staffing last month. Staff costs (a proxy for wages) declined marginally for the first time April 2016. Firms also cut selling prices for the third month in a row in September even as input costs rose. However, the rate of producer price inflation eased from August.
Despite the relative softness in the September survey, the PMI for the third quarter was higher than both first and second quarters of 2018, with output and new work rising at a faster rate than in the first half of this year.
“The September survey data points to slower growth in the non-oil private sector in last month, which is surprising given the backdrop of rising oil prices and sharply higher oil production since June. However, we remain optimistic that sustained higher oil production will support faster expansion in the non-oil sectors in the fourth quarter, particularly manufacturing, transport & logistics,” said Haque.
Egypt’s PMI reading for September fell from 50.5 in August to 48.7 in September. The latest reading pointed to a marginal deterioration in operating conditions at Egyptian non-oil private sector companies.
The overall downturn reflected the first decline in new business in three months. That said, the latest contraction was modest. “PMI figure for September represents a return to contractionary territory for the non-oil private sector in Egypt, indicating that despite the two months of consecutive 50-plus readings in July and August, there remains some weakness in the recovery,” said Daniel Richards, MENA Economist at Emirates NBD.