Saudi PMI recovers in August on higher output, orders

Saudi Arabia's non-oil private sector growth rose in August, supported by stronger output and new orders growth, Emirates NBD (ENBD) said in a new report on Tuesday.

The seasonally adjusted Purchasing Managers' Index (PMI) rose to 55.1 last month from 54.9 in July.

A level above 50 means business is expanding and below 50, contracting.

Output growth accelerated to 59.7 from 58.8, while growth of new orders climbed to 59.0 from 58.5. However, employment growth slowed marginally, to 51.0, the report said.

While the survey showed non-oil private sector growth had accelerated in the last three months, it noted that the average PMI reading so far this year was still the “slowest since the survey was launched in August 2009.”

"Employment growth was also relatively modest in August, with just 2 percent of firms surveyed reporting increased hiring," said Khatija Haque, head of regional research, Emirates NBD.

"Some firms said domestic demand was supported by promotional activity such as discounts. Output prices fell outright for a second straight month in August even as input price inflation remained positive," she added.

Meanwhile, companies surveyed remained optimistic about their future output, with 17 percent expecting their output to be higher in a year’s time, but slightly lower proportion than in July, the bank noted.

Last month, the International Monetary Fund said the Saudi economy, which contracted by 0.9 percent in 2017, is forecast to grow by 1.9 percent this year, up 0.2 percentage points from its April projections.