Saudi non-oil private sector growth slips to five-month low in July -PMI

Madiha Shakeel August 5, 2019

DUBAI: Growth in Saudi Arabia’s non-oil private sector lost momentum and slipped to a five-month low in July partly because of lower growth rates in output and new orders, a monthly survey of companies showed on Monday.

The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) ticked down to 56.6 in July from to 57.4 in June, well above the 50 mark indicating expansion, but at its lowest level since February.

Growth in Saudi Arabia’s non-oil private sector was weak last year, hurt by fuel price hikes and the introduction of a 5% value-added tax.

It has improved this year, with the PMI averaging 56.8 from January till July, against a 53.8 average for the whole of 2018.

“Saudi Arabia’s non-oil private sector started the second half of the year growing at a healthy rate, according to the latest PMI data,” said Phil Smith, principal economist at IHS Markit.

“However, the survey’s indicators for output, new orders and future expectations are all signalling some loss of momentum compared with the second quarter.”

Output growth slowed to 59.2 in July, also a five-month low. The index for new orders stood at 63.4, down from 64.9 in June, and at its lowest since January.

Labour market conditions in the kingdom’s non-oil private sector remained subdued, with the employment sub-index increasing only marginally to 50.4.

“The one area where the survey did point to some improvement was exports, which continue to show signs of recovery following an underwhelming couple of years,” said Smith.

New export orders rose at the highest pace in over two years, the survey showed.

 

Copyright Reuters, 2019

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