JEDDAH: The D&B Business Optimism Index (BOI) survey for Q3, 2016 reveals mixed sentiments for Saudi firms.
Despite some recovery in oil prices toward the end of Q2, raising to middle $40-$50 a barrel range, the Q3, BOI for the hydrocarbon sector slipped back into negative territory at -2 points after recording 3 points in Q 1, according to the latest survey conducted by Dun & Bradstreet South Asia Middle East Ltd. (D&B) in association with the National Commercial Bank (NCB).
The negative momentum impacted business outlook as only 38 percent of the participants in the survey expect no hindrance to their business, the survey points out.
Looking beyond hydrocarbon, the BOI of non-hydrocarbon has maintained similar expectations to the previous quarter at 21 points, where only 56 percent of the participants were aware of Vision 2030 and NTP 2020.
Vision 2030 and NTP 2020 seem to have brought some optimism, thus holding the BOI of the non-hydrocarbon sector from further deterioration.
Moreover, sharp fall of contracts awards witnessed over H1, 2016, recording approximately SR48 billion, not only impacted the BOI of the construction sector with a reading at 11 points and 12 points in the Q2 and Q3, but other sectors were also impacted in varying degrees.
In turn, the Q3 BOI of trade and hospitality dropped sharply to 18 points from 32 points in Q2, 2016. Reflecting the positive impact of Vision 2030 and NTP 2020, approximately 30 percent of each of the non-hydrocarbon firms participating in the survey indicated their expectation to invest in expansion in Q3, 2016.
The survey for Q3 reveals a bearish outlook for the Saudi oil and gas sector, with the composite BOI slipping into negative territory in Q3 to -2 from 3 in Q2.
In respect of the business environment 38 percent of the firms do not expect any obstacles in their operations.
Thirty of the oil and gas companies have indicated plans to invest in business expansion.
The Saudi non-hydrocarbon sector has maintained its forecast for Q3 at the previous quarter’s level, with the composite BOI staying steady at 21.
Regarding the Saudi business environment, firms are more upbeat about Q3 than they were for Q2.
Business sentiment is most dented by low oil prices (13 percent have cited it as a key hindrance), issues related to government rules and regulations (13 percent) and competition (7 percent).
The manufacturing sector’s optimism outlook has bounced up from the series low seen in Q1 and Q2 2016; the composite BOI has improved to 27 in Q3 from 22 in Q1 and Q2.
The demand, hiring and net profits BOIs have strengthened on a quarterly basis as businesses expect new projects from new clients and an overall increase in demand.
The outlook for the finance, real estate & business services sector has reached a new low; the composite BOI has slipped from 24 in Q2 to 23 in Q3.
The trade and hospitality sector’s forecast for Q3 is at the lowest level recorded.
The composite BOI for the construction sector has edged up by a single point from 11 in Q2 to 12 in Q3.
The transportation, storage and communication sector’s forecast in Q3 has increased from 7 in Q2 to 14 in Q3.
The current survey shows that SMEs hold a modestly brighter forecast than the large companies, with composite BOIs of 22 and 18 respectively.
Assad Shaikh, associate director, research and advisory services, Dun and Bradstreet South Asia Middle East Ltd., commented; “Sentiments in the region are subdued with respect to firms in the Kingdom’s hydrocarbon sector. The BOI score for this sector is recorded at -2 in Q3, 2016 from 3 in the previous quarter, weighed down by lower scores for selling prices and profitability. On the other hand, the current survey revealed that the composite BOI for the non-hydrocarbon sector is firm at the previous quarter’s level of 21.”
The next Business Optimism Index on Saudi Arabia will be released in October.
Despite some recovery in oil prices toward the end of Q2, raising to middle $40-$50 a barrel range, the Q3, BOI for the hydrocarbon sector slipped back into negative territory at -2 points after recording 3 points in Q 1, according to the latest survey conducted by Dun & Bradstreet South Asia Middle East Ltd. (D&B) in association with the National Commercial Bank (NCB).
The negative momentum impacted business outlook as only 38 percent of the participants in the survey expect no hindrance to their business, the survey points out.
Looking beyond hydrocarbon, the BOI of non-hydrocarbon has maintained similar expectations to the previous quarter at 21 points, where only 56 percent of the participants were aware of Vision 2030 and NTP 2020.
Vision 2030 and NTP 2020 seem to have brought some optimism, thus holding the BOI of the non-hydrocarbon sector from further deterioration.
Moreover, sharp fall of contracts awards witnessed over H1, 2016, recording approximately SR48 billion, not only impacted the BOI of the construction sector with a reading at 11 points and 12 points in the Q2 and Q3, but other sectors were also impacted in varying degrees.
In turn, the Q3 BOI of trade and hospitality dropped sharply to 18 points from 32 points in Q2, 2016. Reflecting the positive impact of Vision 2030 and NTP 2020, approximately 30 percent of each of the non-hydrocarbon firms participating in the survey indicated their expectation to invest in expansion in Q3, 2016.
The survey for Q3 reveals a bearish outlook for the Saudi oil and gas sector, with the composite BOI slipping into negative territory in Q3 to -2 from 3 in Q2.
In respect of the business environment 38 percent of the firms do not expect any obstacles in their operations.
Thirty of the oil and gas companies have indicated plans to invest in business expansion.
The Saudi non-hydrocarbon sector has maintained its forecast for Q3 at the previous quarter’s level, with the composite BOI staying steady at 21.
Regarding the Saudi business environment, firms are more upbeat about Q3 than they were for Q2.
Business sentiment is most dented by low oil prices (13 percent have cited it as a key hindrance), issues related to government rules and regulations (13 percent) and competition (7 percent).
The manufacturing sector’s optimism outlook has bounced up from the series low seen in Q1 and Q2 2016; the composite BOI has improved to 27 in Q3 from 22 in Q1 and Q2.
The demand, hiring and net profits BOIs have strengthened on a quarterly basis as businesses expect new projects from new clients and an overall increase in demand.
The outlook for the finance, real estate & business services sector has reached a new low; the composite BOI has slipped from 24 in Q2 to 23 in Q3.
The trade and hospitality sector’s forecast for Q3 is at the lowest level recorded.
The composite BOI for the construction sector has edged up by a single point from 11 in Q2 to 12 in Q3.
The transportation, storage and communication sector’s forecast in Q3 has increased from 7 in Q2 to 14 in Q3.
The current survey shows that SMEs hold a modestly brighter forecast than the large companies, with composite BOIs of 22 and 18 respectively.
Assad Shaikh, associate director, research and advisory services, Dun and Bradstreet South Asia Middle East Ltd., commented; “Sentiments in the region are subdued with respect to firms in the Kingdom’s hydrocarbon sector. The BOI score for this sector is recorded at -2 in Q3, 2016 from 3 in the previous quarter, weighed down by lower scores for selling prices and profitability. On the other hand, the current survey revealed that the composite BOI for the non-hydrocarbon sector is firm at the previous quarter’s level of 21.”
The next Business Optimism Index on Saudi Arabia will be released in October.
