Growth in Saudi Arabia’s non-oil private sector rose to a 19-month high in June as output and new work increased, a new business survey has shown.
The Emirates NBD Purchasing Managers’ Index (PMI) for Saudi Arabia rose to 57.4 in June, up from 57.3 in May and the highest since November 2017.
Business confidence towards future growth prospects was also strongly optimistic during June. Despite easing to a 10-month low, just under 39 percent of respondents forecast greater business activity over the coming 12 months. Anecdotal evidence suggested that firms were optimistic towards the impact of forthcoming business investment and new project wins.
Khatija Haque, Head of MENA Research at Emirates NBD, said: “The June survey data showed little change from May’s readings, with the headline PMI only marginally higher on the back of slightly faster new work growth.
“While both output and new work increased at a solid rate in June, there was almost no change in private sector employment. Firms remained optimistic about future output, although this component of the survey declined to the lowest level since August 2018, possibly reflecting heightened geopolitical tension in the region.”
In contrast to the headline PMI, output growth in Saudi Arabia’s non-oil private sector slowed to a three-month low during June while the rate of expansion remained sharp and was broadly in line with the long-run series average.
The latest survey data saw an acceleration in new business growth at businesses in Saudi Arabia’s non-oil private sector. The rate of expansion was marked, with June’s improvement the fastest in three months while inflows of new orders from abroad rose for the fourth month running.
Partly due to an increase in new order inflows, non-oil private sector businesses expanded their payroll numbers during June. However, the rate of job creation was marginal and slowed from May’s four-month high.
June saw a second consecutive monthly rise in average cost burdens faced by non-oil private sector businesses. Despite this, the rate of inflation was fractional and eased from May. Anecdotal evidence from respondents indicated that price competition among suppliers had acted as a restraint on cost burdens.
Reflecting stronger new business growth, firms ramped up their input buying at a marked pace during June. However, the rate of growth eased from May’s 17-month high.
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