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Khatija Haque - Head of Research & Chief Economist
Published Date: 04 September 2018
The headline Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) rose to 55.1 in August from 54.9 in July, on stronger output and new orders growth. However, employment growth was modest, and the slowest in three months, while average selling prices declined for the second month in a row.
The survey data suggests that the pace of non-oil private sector growth in the Kingdom has accelerated in the last three months, relative to the first five months of the year. Nevertheless, the rate of expansion so far in 2018, measured by the average PMI reading for January through August, is markedly weaker than for the same period last year, and in fact the slowest on record.
The output and new work indices rose to their highest levels so far this year at 59.7 and 59.0 respectively, but as with the headline PMI, year to date both components remain well below previous years’ averages. Export orders increased only marginally in August, and some firms noted that domestic demand was supported by promotional activity. This is also reflected in the output price index, which showed a decline in average selling prices for the second month in a row in August, despite higher input costs.
Employment growth was also relatively modest in August, with just 2% of firms surveyed reporting increased hiring. Staff costs (wages) were unchanged on average last month. Firms increased their purchasing activity in August, with the quantity of purchases index rising to 58.0 from 55.6 in July. The stock of pre-production inventory rose at a similar rate to last month.
On the whole, firms surveyed were optimistic about their future output, with 17% of firms expecting their output to be higher in a year’s time. However, this is a slightly lower percentage than in July. None of the firms surveyed in August expected their output to decline in the coming year.
Source: IHS Markit, Emirates NBD Research
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