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Abu Dhabi, UAEWednesday 14 November 2018

Saudi Arabia non-oil business improves in October, says Emirates NBD

Stronger inflows in new business drove expansion, but output growth slowed

The six Gulf Cooperation Council members will cumulatively need $300 billion between 2018-2021 to finance their fiscal deficits, with around 50 per cent of funding going to Saudi Arabia. AFP
The six Gulf Cooperation Council members will cumulatively need $300 billion between 2018-2021 to finance their fiscal deficits, with around 50 per cent of funding going to Saudi Arabia. AFP

Saudi Arabia’s non-oil private sector registered an improvement in business conditions in October, with a rise in new orders driving an expansion of the economy despite a decline in output growth, a survey showed.

The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index – a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy – stood at 53.8 in October, up from 53.4 in September.

A reading above 50 indicates an improvement in business conditions in the survey produced by Dubai's largest lender and IHS Markit.

“The latest expansion was moderate and above that recorded in September, although it remained weak in the context of historical data,” Emirates NBD said.

Stronger inflows of business in domestic and foreign markets contributed to the latest expansion, and foreign demand improved after a deterioration in September, the survey found.

However, output growth eased to a six-month low and was the third weakest since the survey’s inception in August 2009 – although it remained above the 50 "no change" mark.

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The fall in October was the first in average cost burdens faced by non-oil private sector businesses since the survey began. However, the rate of decline was slight overall and linked to competitive pressures among input suppliers and falling wage bills, Emirates NBD added.

Meanwhile, business confidence about future growth prospects hit a 58-month high in October. Non-oil private sector businesses increased their payroll numbers at the fastest rate in seven months to service the increase in new order inflows, and as sentiment grew.

Meanwhile, stocks of purchases increased once again during the latest survey period.