Saudi Arabia's non-oil private sector growth races to six-month high

Increase in output and new order growth sees Saudi private sector improve at its fastest pace in 2018
Saudi Arabia's non-oil private sector growth races to six-month high
By Lubna Hamdan
Tue 03 Jul 2018 02:00 PM

An increase in output and new order growth saw Saudi Arabia’s non-oil private sector improved at its fastest pace in 2018 so far during June, according to the Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) survey.

The monthly survey found that sharper volume pressures led to the fastest build-up in backlogs of work in 11 months, while both input and output price pressures remained subdued in terms of inflation.

“The rise in the headline PMI to the highest level this year reflects a strong recovery in new orders (including export orders) and output. Firms had been anticipating this for several months, as reflected in the very strong ‘future output’ readings since February,” said Khatija Haque, head of MENA research at Emirates NBD.

Haque added it isn’t surprising that the future output index declined sharply in June, with most firms now expecting their output to be relatively stable over the next twelve months.

The PMI headline recorded its highest reading in 2018 so far, rising from 53.2 in May to 55.0 in June. It is designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy.

While the figure was above the neutral 50.0 mark, indicating an improvement in business conditions, its rate of growth remained below the average registered since the survey’s inception in 2009.

Output growth accelerated at the end of the second quarter, with the latest expansion being the strongest since December last year.

However, despite a rise in new orders, firms hired additional staff at a rate below the historical average. Furthermore, despite the upturn in business conditions, optimism towards future growth dropped to a nine-month low.

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