Saudi Arabia's non-oil private sector economy rises to four-year high
Purchasing Managers' Index was at its highest since August 2015 and signalled a sustained improvement in growth momentum in the Arab world's biggest economy
Saudi Arabia's non-oil private sector economy continued to expand in October, with business conditions improving at the fastest pace in four years, as output and new order growth in the kingdom gathered pace.
The headline seasonally adjusted Purchasing Managers’ Index – a gauge designed to give a snapshot of operating conditions in the non-oil private sector economy – rose to 57.8 in October from 57.3 in September. The index was at its highest since August 2015 and signalled a sustained improvement in growth momentum in the Arab world's biggest economy.
"Growth momentum continued to build during October … [with] output and new orders expanding at faster rates, mostly driven by domestic sales,” said Amritpal Virdee, an economist at IHS Markit. "There were also signs of export conditions becoming more supportive, with panellists stating that they had seen an overall improvement in foreign demand conditions.”
The upturn in business conditions seen as the non-oil private sector entered the final quarter of the year was led by a “steep and accelerated increase” in new business, the sharpest rise since June. Higher demand resulted in a larger overall output in October, with the rate of growth accelerating for the third consecutive month to the highest since December 2017, according to the survey.
October also saw a sharp increase in purchasing activity as companies looked to bring their buying levels in line with higher output requirements and build up inventories.
Confidence in the outlook for business activity in the year ahead rose in October, with around 39 per cent of the companies surveyed expecting an increase in output over the next 12 months, as they remained optimistic about a rise in sales.
On the price front, average selling prices declined for the second time in the past five months, as companies sought to stimulate additional customer orders.
Companies operating in Saudi Arabia's non-oil economy, however, remained reluctant to recruit additional staff, as employment rose only modestly and at a slower pace than in September.
Updated: November 5, 2019 11:45 AM