Dubai: Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) registered 54.5 in December, down slightly from November’s 11-month high of 55.2.
“The renewed dip in the headline index following November’s 2018 high confirms this year as the weakest in the series, averaging 53.8 as compared to an annual average of 58 over the previous eight years. This indicates a fairly weak expansion in the non-oil private economy as compared to previous years, even despite the pick-up in oil prices enjoyed earlier in 2018,” said Daniel Richards, MENA Economist at Emirates NBD.
Despite easing since November, output growth in December remained quicker than the average over 2018 as a whole. The survey indicated that business activity had risen in part due to stronger demand. New export orders were up for a third straight month but only fractionally, indicating that the pick-up in demand was centred on the domestic market.
Data showed new export orders remained weak implying that the bulk of new orders are being driven by domestic demand, achieved through continued price discounting. Output prices decreased at a marginally faster pace in December, as firms continued to cite strong domestic competition. This seems to have contributed to margin pressure for Saudi Arabian firms in December, as output prices decreased, input prices remained in expansionary territory.
Latest PMI data showed the continuation of a weak rate of employment growth across the non-oil private sector. Firms reported hopes of a sustained improvement in market conditions, and foresee new products, competitive pricing and greater market activity leading to output growth.
Egypt PMI at 5-month high
Egypt’s PMI rose from 49.2 in November to 49.6 in December, signalling a softer deterioration in the health of the private sector. The index was at a four-month high, moving closer to the 50 mark that separates expansion from contraction.
The improvement in the headline index was supported by the weakest fall in new orders in the current four-month sequence of reduction. Employment declined modestly in December, completing a full quarter of job cuts. Input cost inflation eased further in December, setting a new record low across the survey history. This was largely due to the softest uptick in purchase prices in over six years. Salaries continued to grow solidly, albeit at a weaker pace compared to November. Concurrently, output prices increased only marginally, although the rise was slightly faster than November’s 34-month low. Sentiment remained relatively subdued across Egypt’s non-oil private sector in December. Most companies expect output to be unchanged in the coming 12 months.
