The November expansion was the highest since December last year but below the historical average
Saudi Arabia's non-oil sector activity recovers from six-month low
Saudi Arabia’s non-oil sector growth increased in November, rebounding from a six-month low recorded in October, according to a new survey released on Thursday.
The seasonally-adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index, a composite indicator that gives an overview of operating conditions in the non-oil private sector economy, rose to 55.2 in November from 53.8 in October, the lender said. A reading above 50 indicates expansion, while a reading below 50 signals contraction. The report is sponsored by Dubai’s biggest lender and compiled by IHS Market. The reading, which is the highest since December last year, is below the series average of 57.7 and the year-to-date activity is lower than that during the January-November period in 2017.
“Helping drive the upturn was stronger demand for goods and services. The main impetus continued to come from the domestic market, with new export orders rising only marginally and at a much slower rate than total new business,” Emirates NBD said.
“The latest survey indicated a modest monthly rise in employment, although the majority of firms reported unchanged headcount in November. Some firms reported hiring additional staff in marketing positions to help boost sales, while a rise in backlogs of work also pointed to pressure on operating capacity.”
Saudi Arabia, the biggest Arab economy, is implementing a series of reforms to prop up growth in the non-oil sector. Its budget for 2018 was the highest ever and was followed by a stimulus package aimed at attracting foreign direct investment, boosting employment and diversifying the economy away from oil income.
“Both output and new orders increased at a faster rate in November, and while new export order growth was firmer in November than it has been in recent months, it remained sluggish,” said Khatija Haque, head of MENA Research at Emirates NBD.
“The recovery in new orders thus likely reflects stronger domestic demand. However, some of the rebound in new order growth appears to be on the back of price discounting as well as increased marketing.”