Saudi Arabia Non-Oil private sector growth hits 6-Month high in May
Riyadh - QNA
Saudi Arabia’s non-oil private sector looked to be in good shape midway through the second quarter, as business conditions improved to the greatest extent since last November.
Both output and new orders rose sharply in May, with the rate of expansion in the latter picking up to a five-month high, Saudi daily (Arab News) reported.
Companies raised their input buying at a faster pace, in line with current growth and projections of future improvements in demand.
On the price front, cost pressures remained subdued, while charges fell for the seventh month in a row.
The survey, sponsored by Emirates NBD and produced by Markit, contains original data collected from a monthly survey of business conditions in the Saudi private sector.
Commenting on the Emirates NBD Saudi Arabia PMI, Khatija Haque, head of MENA Research at Emirates NBD, said: "The rise in the Saudi PMI to the highest reading in six months is encouraging, as it shows the resilience of the non-oil economy even in the face of tighter fiscal policy. Domestic demand remains robust, even as export demand has softened".
The headline seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) – a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy – climbed to a six-month high of 54.8 in May, from 54.2 in April. That was indicative of a robust improvement in the health of Saudi Arabia’s non-oil private sector.
However, growth was still relatively muted as the latest figure remained closer to January’s record low (53.9) than the long-run series average (58.6).
A sharp expansion of new business was a key positive takeaway in the latest survey period.
The rate of increase was the most marked since the turn of the year, with panellists commenting on new project start-ups and the introduction of new products.
Data highlighted the strength of domestic demand in particular, as exports declined for the second month running.
Higher new work led to another rise in output during May. There were reports that better marketing had also contributed to growth.
With new orders rising and anecdotal evidence pointing to expectations of future improvements in demand, purchasing activity increased at a faster pace. Stocks of inputs followed suit – the rate of inventory building accelerated to a five-month high.
Total cost pressures in Saudi Arabia’s non-oil private sector eased during May. In fact, the rate of inflation was the second-slowest recorded since the series began in August 2009.
Data signalled relatively muted rises in both salaries and purchasing costs. With input prices increasing only modestly, firms were able to reduce charges for the seventh straight month