Growth in Saudi Arabia's private sector slowed to its lowest mark for four months in September, according to the latest Emirates NBD Purchasing Managers’ Index (PMI).
At 53.4 in September, down from 55.1 in August, the headline seasonally adjusted PMI was well below the historical average during the latest survey period.
Job creation was marginal overall in September. The rate of job growth eased to a ten-month low in the most recent survey and well below the series’ historical average.
Output across the non-oil private sector increased at a slower rate during September, as inflows of new orders also slowed, according to anecdotal evidence.
Client demand for goods and services across Saudi Arabia’s non-oil private sector rose during September, thereby extending the current sequence of growth to five months.
That said, the rate of growth eased in the latest survey, with September’s rise being the second-weakest in the period. Furthermore, new export orders deteriorated for the first time since May.
Partly in response to easing new order growth, backlogs of work at non-oil private sector companies increased at the slowest pace in four months. The rate of build-up was slight overall.
On the price front, input price inflation eased to a four-month low in September amid falling wage bills. Meanwhile, non-oil private sector companies lowered their selling prices for the third month in a row during the latest survey period.
Despite a weaker expansion in September, companies remained optimistic towards future growth prospects. According to anecdotal evidence, new project wins underpinned positive sentiment. The overall level of confidence was at a four-month high.
Khatija Haque, head of MENA Research at Emirates NBD, said:
“The decline was due to softer growth in output and new orders, with new export orders contracting last month. Employment and inventory growth were also weaker in September, weighing on the headline PMI.
“The employment index fell to 50.7 in September, the lowest since November 2017, as nearly 97 percent of firms surveyed indicated ‘no change’ in staffing last month.
“Despite the relative softness in the September survey, the PMI for Q3 was higher than both Q1 and Q2 2018, with output and new work rising at a faster rate than in the first half of this year. However, this did not translate into faster employment growth and staff costs were flat on average in Q3.
“The September survey data points to slower growth in the non-oil private sector in last month, which is surprising given the backdrop of rising oil prices and sharply higher oil production since June. However, we remain optimistic that sustained higher oil production will support faster expansion in the non-oil sectors in Q4, particularly manufacturing, transport and logistics."For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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