Mubasher: The headline seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index™ (PMI) signalled a further acceleration in growth during August.
Saudi Arabia’s non-oil private sector continued its growth in August, with business conditions improving to the greatest extent in a year. Output and new business remained the key growth drivers; both rose sharply and more quickly than in July, according to a survey sponsored by Emirates NBD and produced by IHS Markit.
Up from 56.0 in July to 56.6, PMI’s latest reading was a one-year high.
“That said, whereas business conditions improved strongly in the context of recent data, the index was still below its long-run series average (58.5),” the survey said.
Employment and input stocks also increased, with a number of companies looking to expand capacity in line with growing workloads. The rate of hiring in KSA accelerated to an 11-month high. The rise in staff levels was only moderate overall, while the amount of unfinished work rose for the first time in three months.
“The rise in the Emirates NBD Saudi Arabia PMI to the highest level in a year is encouraging, although we note that the average PMI so far this year is still below 2015, indicating a slower rate of private sector growth,” head of MENA Research at Emirates NBD Khatija Haque said.
“Stronger export demand has helped support overall new orders, and more firms have increased hiring in August as well. Record high oil production in July and August likely supported activity in the manufacturing sector over the summer,” she added.
New export orders were up for the second month in a row and at the strongest pace so far in 2016.
The rate of cost inflation accelerated to a 10-month high. The rise in selling prices was only modest, the survey noted.
With output and new orders increasing markedly in the kingdom, purchasing activity rose further in August. The pace of growth accelerated to an 11-month high, ensuring that input stocks continued to build up.
“Firms upped their quantities of purchases in spite of higher costs during August. Purchase prices rose at the fastest pace since last October and, combined with greater salaries, led to a pick-up in the overall rate of cost inflation,” according to the survey.
The rate of inflation was strong relative to the past two years, yet still weaker than the average over the survey’s entire history.
