JEDDAH: Growth of Saudi Arabia’s non-oil private sector eased in January, continuing the trend seen through much of the latter part of 2015.

In fact, business conditions improved at the weakest pace in the survey’s six-and-a-half year history, with a muted rise in new work the key factor behind the slowdown.

Total new business was restricted in turn by a negligible increase in new export orders. Similarly, relatively subdued growth was seen in output, employment and input buying. Meanwhile, purchasing costs rose only modestly, allowing firms to lower charges in an effort to attract new clients.

The survey, sponsored by Emirates NBD and produced by Markit, contains original data collected from a monthly survey of business conditions in the Saudi private sector.

Commenting on the Emirates NBD Saudi Arabia PMI, Khatija Haque, head of MENA Research at Emirates NBD, said: “The slowdown in the non-oil sectors is in line with our expectations as the economy adjusts to lower oil prices and fiscal policy is adjusted accordingly. Global financial market volatility in the first weeks of 2016, and increased concerns about Chinese and global growth are likely to have weighed on sentiment, and may have contributed to the sharp slowdown in new export orders last month.”

The headline Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) — a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy — slipped to a survey-record low (53.9) for the third time in the past four months during January.

Previous low points came in October (55.7) and December (54.4), and the latest reading signalled a continuation of the general trend seen toward the end of 2015.

However, by remaining well clear of the neutral 50.0 mark, the index still signalled solid growth overall.

The fall in the headline index was driven in part by a slower expansion in new business at the start of 2016. Though remaining marked overall, the latest rise was the weakest in the series history.

Data showed that a near-stagnation in new work from abroad was a factor behind the overall easing — the rate of export growth was by far the slowest on record. Where new clients were secured, panellists commented on better marketing and lower charges.

Output also rose more slowly in January, though the pace of expansion held up better than that for new work. Higher activity was widely linked to new project start-ups.

Non-oil private sector employment in Saudi Arabia increased further during January. Contrasting with the overall slowdown, the rate of hiring picked up from December’s low. That said, jobs growth was still muted compared with the series trend. Meanwhile, latest data showed backlogs of work rising again, albeit only marginally.

Companies’ purchasing reflected the relative weakness of new work inflows in January, as input buying rose at the slowest pace since the survey began in August 2009. The rate of inventory accumulation also eased, but there were still reports of stocks being built up in anticipation of stronger demand.

On the price front, the rate of total input cost inflation was little-changed from the survey-record low seen in the final month of 2015. Purchase prices showed a similar trend, rising only modestly amid greater competition among suppliers.

Firms were subsequently able to cut their tariffs for the third straight month.

Though marginal, the latest fall marked the longest sequence of decline since the survey’s inception back in 2009.