DUBAI: Outlook for Saudi Arabia’s non-oil private sector economy remains firms despite a decline in an index measuring business conditions in the Kingdom.
“We remain optimistic that sustained higher oil production will support faster expansion in the non-oil sectors in Q4, particularly manufacturing, transport and logistics,” Khatija Haque, head of Middle East North Africa research at Emirates NBD, said on Wednesday.
“This view appears to be shared by the majority of firms surveyed, as nearly 39 percent of firms surveyed expect their output to be higher in 12 months, the most since the May survey.”
The Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) slowed to 53.4 in September from 55.1 in August, and the lowest reading since May, as the survey noted softer growth in output and new orders amid a decline in new export orders.
Employment and inventory growth were also weaker in September, weighing on the headline PMI, the Emirates NBD survey added.
“The employment index fell to 50.7 in September, the lowest since November 2017, as nearly 97 percent of firms surveyed indicated ‘no change’ in staffing last month,” Haque said in the report.
Staff costs – a stand-in for wages – declined marginally for the first time April 2016, while companies also reduced their selling prices for the third month in a row in September despite an increase in input costs.
“The PMI for Q3 was higher than in both Q1 and Q2 2018, with output and new work rising at a faster rate than in the first half of this year. However, this did not translate into faster employment growth and staff costs were flat on average in Q3,” Haque said.