Khatija Haque - Head of MENA Research
Published Date: 06 September 2017
The Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) rose to 55.8 in August from 55.7 in July, signalling a solid rate of growth in the kingdom’s non-oil private sector last month. New orders increased at a faster rate than in July, supported by a solid rise in new export orders. Output also rose sharply in August but at a slightly slower rate than in July. Panellists attributed the strong rise in new orders and activity to “more projects and stronger underlying demand.”
Despite this, employment increased at the slowest rate in four months in August, with the employment index slipping to 50.7 last month. Stocks of pre-production inventories increased sharply however, as output rose and as firms anticipated future demand.
On the inflation front, input costs rose at a slightly slower rate in August compared with July, with the overall input price index easing to 53.0. The main driver was higher purchase costs as increases in staff costs were marginal. Some of the higher input costs were passed onto buyers, with selling prices rising modestly in August. The output price index rose to 51.0 last month, the highest reading since February. Firms in Saudi Arabia remained optimistic about the coming year on average, although the degree of optimism was the weakest since October 2016.
Overall, the August PMI survey shows a non-oil sector that remains robust, and is showing growth, which is in line with our expectations for 2017. The headwind to overall GDP growth this year is from crude oil output, which has declined relative to 2016 on the back of OPEC agreed production cuts.
Source: IHS Markit, Emirates NBD Research
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