Saudi Arabia's non-oil private sector growth cools off in December
Despite easing since November, the increase in output last month was quicker than the 2018 average overall
Saudi Arabia’s non-oil sector growth cooled off in December, however, the companies in the biggest Arab economy reported a sustained increase in output on the back of rising demand for goods and services, a survey found.
The Emirates NBD Purchasing Managers’ Index for Saudi Arabia eased to 54.5, down slightly from November's 11-month high of 55.2. A reading above the 50-mark indicates growth and below 50 signals contraction. The index is a composite indicator designed to give an overview of operating conditions in the non-oil private sector economy. The survey is sponsored by Dubai's biggest lender, Emirates NBD, and produced by IHS Market.
Despite easing since November, output growth last month remained quicker than the average over 2018 as a whole. The survey indicated that business activity had risen in part due to stronger demand, with companies noting a further - albeit slightly slower - increase in inflows of new business. New export orders were up for a third straight month but only fractionally, indicating the pick-up in demand was centred on the domestic market, it added.
While underlying market conditions in the kingdom were reported to have improved, the survey continued to point to strong competitive pressures across the private sector and, on average, companies reduced selling prices to help support sales.
The December’s decrease in average output charges was more marked than seen in the penultimate month of the year.
“There was a small squeeze on margins as firms reported slight increases in both purchase prices and staff pay, though costs pressures in general were muted by historical standards,” the survey added.
The latest data showed the continuation of a weak rate of employment growth across the non-oil private sector.
“December’s increase in staffing numbers was in fact the smallest since April 2017, with the vast majority of companies keeping headcounts unchanged from the month before,” according to the survey. “Similarly, the rate of growth of purchasing activity also eased, down to the weakest recorded in the survey’s nine-and-a-half-year history. Stocks rose more slowly as a result, while average lead times on purchased items shortened.”
Updated: January 10, 2019 11:44 AM