Saudi Arabia’s non-oil private sector witnessed a pick-up in growth in February following the weakest improvement in business conditions on record seen in the first month of 2016, according to a new report.
Rates of expansion in output, new orders and employment all accelerated, leading to sharper rises in purchasing activity and input stocks, said the latest Emirates NBD Saudi Arabia Purchasing Managers' Index.
That said, growth rates were still subdued relative to their respective long-run averages.
After adjusting for seasonality, the headline Emirates NBD Saudi Arabia PMI posted 54.4 in February, up from January’s survey-record low of 53.9.
Though signalling a rebound in growth, the latest figure was well below the long-run series average (58.8). Nevertheless, it pointed to a solid improvement in business conditions overall.
On the price front, total input costs rose only modestly. As a result, companies were able to lower their tariffs at the fastest pace in the series history amid greater competition.
Khatija Haque, head of MENA Research at Emirates NBD, said: “The improvement in non-oil sector expansion in February is encouraging, particularly as external demand appears to have picked up after a particularly weak start to the year.
"Price discounting has also likely contributed to order growth last month. Overall, the data suggest that the non-oil economy in Saudi Arabia is growing despite low oil prices, albeit at a slower rate.”
Growth of the non-oil private sector as a whole was supported by further expansions in output and new work during February. Both increased more quickly than in January, with panellists commenting on a general improvement in client demand stemming from better marketing and discounted prices.
Unlike in January, the rise in total new business was reinforced by a robust expansion in new export work during February. Export growth had eased to near-stagnation at the start of 2016, but the respective index picked up substantially as stronger commercial strategies in foreign markets came to fruition.
A larger workforce was another factor behind growth at Saudi Arabia’s non-oil private sector firms. Though modest, the pace of job creation was the most marked in four months. Meanwhile, backlogs of work rose only marginally in February.
The rate of input price inflation remained subdued in the context of historical data during February. Both salaries and purchasing costs increased modestly, with the rise in the latter restricted by competitive pressures among suppliers.
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