Saudi Arabia PMI slows in June, but business conditions continue to improve

Saudi Arabia PMI slows in June, but business conditions continue to improve
The fall in the Emirates NBD Saudi Arabia Purchasing Managers’ Index was consistent with the slower improvement in business conditions in the Kingdom. (Reuters)
Updated 04 July 2017

Saudi Arabia PMI slows in June, but business conditions continue to improve

Saudi Arabia PMI slows in June, but business conditions continue to improve

A key indicator of the Kingdom’s non-oil private sector economy last month declined to its lowest reading since October 2016, even as companies raised output and added jobs to cope with new export orders.
The Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) dipped to an eight-month low of 54.3 in June from 55.3 in May, which the bank said was consistent with a marked but slower improvement in business conditions in the Kingdom.
The bank issues the monthly survey of business conditions in Saudi Arabia's non-oil private sector through financial information services company Markit.
A reading above 50 suggests that the non-oil economy is growing, while a reading below 50 suggests that it is contracting.
Emirates NBD reported that output increased sharply last month, albeit at a slower rate, as new export orders increased after two months of decline.
“Encouragingly, new export orders increased in June after two months of decline. Employment rose at a slightly faster rate in June (51.4) but remains relatively sluggish in the context of consistently strong growth in output in recent months,” Khatija Haque, Emirates NBD’s head of Mena research, said in a statement.
And although input price inflation accelerated slightly in June to 52.1, the surveyed firms noted that these higher costs were not passed on to consumers as output prices rose only marginally during the month.
“Some firms which cut selling prices in June cited ‘competitive pressures’,” the bank said.
Emirates NBD however trimmed its forecast for the Saudi Arabia's GDP growth to 0.5 per cent for 2017 from 1.8 percent previously, following the Kingdom’s decision together with other Opec and non-Opec producers to extend their oil output reduction.
Elsewhere, the Emirates NBD UAE Purchasing Managers’ Index rose to 55.8 last month from 54.3 in May, propped by improved output and higher order growth.
In Egypt, the PMI index was almost unchanged at 47.2, indicating a contraction in the private non-oil economy for the 21st consecutive month.