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Wed 5 Sep 2018 01:50 PM

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Saudi private sector growth 'weakest on record' so far in 2018

Emirates NBD survey shows that Saudi Arabia's private sector is growing at slowest rate

Saudi private sector growth 'weakest on record' so far in 2018

Growth in Saudi Arabia' non-oil private sector has slowed to its lowest rate on record so far in 2018, according to the latest Emirates NBD Purchasing Managers’ Index (PMI).

While the growth of the private sector rose in the last three months compared to the first five months of 2018, it is the slowest on record for the first eight months of any year since the survey started.

The survey, which is sponsored by Emirates NBD and produced by IHS Markit, contains data collected from a monthly survey of business conditions in the country’s private sector.

The kingdom’s headline PMI rose to 55.1 in August from 54.9 in July on stronger output and new orders, but the rate of growth for January through August this year is weaker when compared to the same period in 2017.

Employment growth in Saudi Arabia was also the slowest in three months, with average selling prices falling for the second month in a row as companies offered promotions to stimulate demand.

“The output and new work indices rose to their highest levels so far this year at 59.7 and 59.0 respectively, but as with the headline PMI, year to date both components remain well below previous years’ averages,” Khatija Haque, Head of MENA Research at Emirates NBD.

Haque added that export orders increased only marginally in August, with some companies noting that domestic demand was supported largely by promotional activity. This is further reflected in the output price index, which revealed a drop in average selling prices for the second month in a row in August, despite higher input costs.

“Employment growth was also relatively modest in August, with just 2 percent of firms surveyed reporting increased hiring. Staff costs (wages) were unchanged on average last month,” added Khatija.

While 17 percent of firms surveyed were optimistic about their future output, expecting it to rise in 2019, the percentage is slightly lower than in July.