Saudi economy records sharpest rise in new work in four years

Saudi economy records sharpest rise in new work in four years
The Saudi economy is rebounding from a sharp slowdown that was triggered by the collapse of oil prices in 2014. (AFP)
Updated 03 December 2019

Saudi economy records sharpest rise in new work in four years

Saudi economy records sharpest rise in new work in four years
  • Headline seasonally adjusted Purchasing Managers’ Index posted 58.3 in November, up from 57.8 in October
  • Saudi economy is rebounding from a sharp slowdown that was triggered by the collapse of oil prices in 2014

LONDON: The Saudi economy recorded its biggest increase in new work in more than four years in November according to a report from IHS Markit.

The headline seasonally adjusted Purchasing Managers’ Index – a composite gauge designed to give a snapshot of operating conditions in the non-oil private sector economy – posted 58.3 in November, up from 57.8 in October.

“A bright spot was a quickening of overall new order growth, which reached its fastest pace since April 2015,” said IHS MArkit economist Amritpal Virdee.

The Saudi economy is rebounding from a sharp slowdown that was triggered by the collapse of oil prices in 2014 that led to many projects being shelved or delayed. The stabilization of oil prices, helped by the ongoing production cuts orchestrated by OPEC and Russia, has boosted spending while at the same time ongoing reforms is making it easier for foreign companies to do business in the Kingdom.

Employment among non-oil private sector companies rose in November, but the rate of job creation was marginal and subdued by historical standards. and the highest in over four years, IHS Markit said.

Firms across the non-oil private sector scaled up their purchasing activity to support increased output requirements according to reports from surveyed businesses. However, growth in buying levels eased.

Some evidence emerged of rising prices with the latest data showing the third increase in charges for goods and services in the past four months.

However, the rise in selling prices was marginal.

Overall input prices continued to increase in November, but the rate of inflation eased for the second month running and was subdued by historical standards. Finally, November’s survey indicated longer lead times on purchased items for the first time since July 2011, which anecdotal evidence attributed to insufficient stocks among suppliers

“Overall, the private sector economy is well-placed as we look forward to 2020, with the survey’s forward-looking gauge, the Future Output Index rising to a nine-month high on the pace of new product initiatives and more positive forecasts for underlying demand,” added Virdee.

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