Dubai: April saw a strong increase in business activity across Saudi Arabia’s non-oil private sector, with the rate of growth quickening for the fourth month in a row to the fastest since December 2017.
Purchasing Managers’ Index (PMI) data for the month showed growth in output remained resilient as employment remains broadly unchanged despite rising demand.
“The headline PMI was unchanged at 56.8 last month. Output and new order growth remained firm, but there has been no meaningful growth in private sector employment over the last three months,” said Khatija Haque, Head of MENA Research at Emirates NBD.
Firms that reported higher output in April often linked this to stronger underlying demand and an associated rise in new business. Growth of new work eased slightly from March’s near four-year high, but nonetheless remained sharp overall and stronger than that of output. New export orders meanwhile rose modestly in April compared with total new business.
Efforts to stimulate sales saw average prices charged for goods and services fall for a sixth straight month in April. Moreover, the rate of decline was among the quickest seen in almost ten years of data collection. A slight fall in firms’ input costs provided scope for price discounting.
“Firms are also discounting prices more aggressively in a sign of an increasingly competitive environment. The decline in selling prices likely supported output and new order growth in April,” Haque said.
Business confidence towards future output rebounded strongly from a six-month low in March to show one of the highest degrees of optimism over the past five years. However, the non-oil private sector jobs market remained lacklustre at the start of the second quarter.
Egypt’s turnaround
Business conditions in Egypt improved in April for first time in eight months. Private sector output was positive for the first time in 18 months as firms noticed stronger demand, and a positive reading for new orders for the second month in a row.
“Egypt’s non-oil private sector expanded at the fastest pace since August 2015 in April, as the Emirates NBD Purchasing Managers’ Index hit 50.8. This was the first time since August last year that the index has breached the neutral 50.0 level which delineates contraction and expansion,” said Daniel Richards, MENA Economist at Emirates NBD.
Central to the improvement in Egypt’s data was an expansion in business activity at the start of the second quarter of the year. Despite being modest, the rise in output was the first seen since November 2017.
New orders saw a slight rise, as many firms reported higher sales and the securing of new contracts. This followed a marginal increase in March. Foreign sales continued to decline, albeit at a softer rate.
