Emirates NBD’s latest tracker shows a rebound after hitting an all-time low in April
Saudi non-oil sector regains momentum in May
Saudi Arabia’s non-oil sector registered a moderate improvement in business conditions in May, signalling a rebound after an all-time low recorded in April, according to Emirates NBD’s latest monthly survey published on Tuesday.
The headline Emirates NBD Purchasing Managers Index for Saudi Arabia rose to 53.2 in May, from 51.4 in April, representing the strongest expansion in three months. The survey is sponsored by Emirates NBD, Dubai’s biggest bank by assets, and produced by IHS Markit, a financial information services company.
Renewed growth of new business and stocks of purchases, alongside a robust output expansion contributed to the upturn, the bank said.
“While the May PMI posted the highest reading this year, the index is still low by historical standards and reflects a slower rate of growth in the non-oil private sector than last year,” said Khatija Haque, head of Mena research at Emirates NBD.
“The survey data suggests that government spending and higher oil prices year-to-date are not boosting economic activity as much as they have in the past, although firms remained highly optimistic about their future prospects.”
Saudi Arabia's economy, which contracted last year on low oil output and austerity measures, is expected to expand this year on higher government spending and oil prices, which touched a three-year high of $80 a barrel last month.
Output growth at non-oil private sector companies accelerated in May, according to the survey, and the pace of expansion overall was robust, with many firms reporting an uptick in business activity and new work. Following the first recorded contraction in stocks of purchases in April, May data signalled a return to growth, albeit small.
Input price inflation eased during the month, but output charges rose for the first time since January, ending a three-month phase of price discounting, the index showed.
Meanwhile, inflows of new orders from abroad deteriorated for the fourth month in a row, while job creation fell to its lowest level in six months.
“The rate of employment growth was slight overall and below the historical trend. That said, the vast majority of panel respondents reported no change in payroll numbers,” Emirates NBD said.
Still, the overall level of positive sentiment expressed by non-oil private sector firms remained elevated, signalling optimism towards future growth, the bank added.