Saudi non-oil business activity spikes despite stagnant jobs market

Emirates NBD data shows that business confidence in the kingdom is at a five-year high
Saudi non-oil business activity spikes despite stagnant jobs market
Growth of new work was found to have eased slightly from a four-year high in March, although it remained sharp and stronger than that of output. New export orders rose modestly in April compared with total new business.
By Bernd Debusmann Jr
Sun 05 May 2019 10:33 AM

There was a marked improvement in business activity in Saudi Arabia in April, with the rate of growth quickening to a rate not seen since December 2017, according to Emirates NBD’s seasonally adjusted purchasing managers’ index (PMI).

According to the data, firms that reported higher output in April linked the increase to stronger demand and an associated rise in new business.

Growth of new work was found to have eased slightly from a four-year high in March, although it remained sharp and stronger than that of output. New export orders rose modestly in April compared with total new business.

Higher output requirements among Saudi non-oil firms were reflected in a further rise in purchasing activity in April. The survey also found evidence that stock levels were bolstered in anticipation of higher inflows of new orders in the coming months.

Additionally, business confidence rebounded strongly after a six-month low in March to now show one of the highest degrees of optimism recorded in the last five years.

However, the non-oil private sector jobs market remained lacklustre at the start of Q2, and rose only slightly in April to continue the worse sequence of jobs data for five years.

The survey noted that competitive pressures and attempts to control costs were among the factors that held back staff recruitment. The average prices charged for goods and services also fell for a sixth straight month in April, with the quickest rate of decline seen in a decade.

“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 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.

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