Global Business
Logo
 

Saudi's non-oil private sector sees growth

Filed on December 3, 2019

(AFP)

Saudi Arabia's non-oil private sector saw further improvements in November, driven by the sharpest rise in new work since April 2015, new data by IHS Markit showed.

Employment among non-oil private sector companies also rose in November, though the rate of job creation was marginal and subdued by historical standards. The headline seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers' Index (PMI) posted 58.3 in November, up from 57.8 in October and the highest in over four years.

Underpinning the positive PMI reading was a further increase in output. Though steep, the rate of expansion eased to the slowest in four months during November. In contrast to the trend for output, inflows of total new business increased at a faster pace during November.

"November's PMI data for Saudi Arabia revealed a stronger improvement in underlying economic conditions and, when coupled with the recent improvements in growth momentum, point to a faster rate of non-oil GDP expansion for the fourth quarter of 2019. A bright spot was a quickening of overall new order growth, which reached its fastest pace since April 2015," said Amritpal Virdee, economist at IHS Markit.

"Stronger demand conditions helped outweigh continued weakness in job creation and slower output growth. Business margins were provided with some relief from a slower rise in input costs. Furthermore, output charges increased during November, reversing October's slight fall. Overall, the private sector economy is well-placed as we look forward to 2020, with the survey's forward looking gauge, the Future Output Index rising to a nine-month high on the pace of new product initiatives and more positive forecasts for underlying demand," said Virdee.

Meanwhile, the IHS Markit Egypt PMI dropped to 47.9 in November, its lowest reading in over two years, as businesses highlighted concerns over the domestic economy and new business declined for the fourth consecutive month.

"The downturn was extended to foreign orders, with firms noting weakness in key export markets. On the positive side, inflationary pressures continued to ease, with the latest mark-up in input costs being the second-softest on record. This allowed companies to raise input buying and also lower selling prices for the first time since May. The drop in charges may see some demand restored in future months," said David Owen, economist at IHS Markit.

Input price inflation in the Egyptian non-oil private sector eased to one of the weakest rates on record in November. A continued market slowdown meanwhile led to solid drops in output and new orders, as well as the first fall in employment since July. Businesses responded with the fastest reduction in output charges in the series history. Output contracted for the fourth consecutive month. Moreover, the rate of decline strengthened to a solid pace, as businesses sought to limit activity due to a drop in new orders.

The rate at which new business fell also accelerated, with panellists linking this to a slowdown in the market. This was additionally felt by exporters, with sales to foreign clients dropping solidly despite new contracts with firms in Saudi Arabia, Greece, Morocco and other countries.

- rohma@khaleejtimes.com

author

Rohma Sadaqat

I am a reporter and sub-editor on the Business desk at Khaleej Times. I mainly cover and write articles on the UAE's retail, hospitality, travel, and tourism sectors.Originally from Lahore, I have been living in the UAE for more than 20 years. I graduated with a BA in Mass Communication, with a concentration in Journalism, and a double minor in History and International Studies from the American University of Sharjah.If you see me out and about on assignment in Dubai, feel free to stop me, say hello, and we can chat about the latest kitten videos on YouTube.


ERROR: Macro /ads/dfp-ad-article-new is missing!
MORE FROM Business
MORE FROM Khaleej Times
CurrentRequestUnmodified: /business/global/saudis-non-oil-private-sector-sees-growth macro_action: article, macro_profile: , macro_adspot:
 
 
 
 
 
KT App Download
khaleejtimes app

All new KT app
is available
for download:

khaleejtimes - android khaleejtimes - ios