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Fri 11 Dec 2015 03:23 AM

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Saudi private sector growth recovers in November from record low

Faster growth of new work helps Saudi Arabia's non-oil private sector to regain some momentum - survey

Saudi private sector growth recovers in November from record low

Faster growth of new work helped Saudi Arabia’s non-oil private sector to regain some momentum during November following record lows recorded the previous month, according to a new survey by Emirates NBD.

The overall improvement in business conditions was also supported by further expansions in output, employment and stocks of purchases but the respective rates of growth all eased marginally since October.

Data for prices showed divergent trends, with charges falling despite further inflationary pressure from input costs. Companies suggested that this was due to stronger competition.  

Adjusted for seasonal factors, the headline Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) rose to 56.3 in November, from 55.7 in October.

The latest reading pointed to an upturn in growth from the record low seen in the prior month, but it was still one of the lowest recorded in the series history.

Khatija Haque, head of MENA Research at Emirates NBD, said: “The improvement in the Saudi Arabian PMI last month is encouraging, particularly against a backdrop of sustained low oil prices and an announced freeze in government spending at the start of Q4.

"The faster growth in new orders and new export orders in November, and continued strength in output, suggests that both domestic and external demand are supportive of non-oil growth even as momentum has slowed from 2014.

"We expect that the rise in oil production this year has helped to support manufacturing, underpinning activity in the non-oil sectors of the economy.” 

Underpinning the pick-up in growth momentum was a sharper rise in new orders placed with Saudi Arabia’s non-oil private sector firms. The rate of expansion quickened to a three-month high, supported by a marked increase in new export business.

Higher new work contributed to another sharp rise in output during November. The rate of growth eased for the third straight month, however, and was slower than the long-run trend.

Reflective of greater business requirements, payroll numbers increased for the 20th consecutive month in November although the pace of hiring was only modest overall.

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