Saudi private sector growth remains steady in July

Saudi Arabia's non-oil private sector growth remained steady in July, supported by a sharp increase in output and new orders although at a slightly slower rate than June, Emirates NBD said in a new report.

The seasonally adjusted Emirates NBD Purchasing Managers' Index (PMI) eased fractionally to 54.9 last month from 55.0 in June but remained in "positive territory which indicated a solid improvement in business conditions."

The PMI figure remained broadly in line with the two-year trend, and above the average seen since the VAT was introduced this year.

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

While input costs continued to rise in July, the rate of increase was slower than in July, the report noted. The non-oil private sector firms continued to report marked growth of output, but at a fractionally lower rate than June.  

Businesses, however, reported the third-sharpest build-up in backlogs of work in the survey’s history last month. Some firms noted delays in ongoing projects, leading to an increase in work outstanding.

Total new order growth was up in July - extending the current phase of growth to three months -  due to an increase in orders from neighboring GCC countries.

Meanwhile, firms saw inventories rise at the fastest rate this year in July, indicating "some optimism" about improving demand in the near term, the report said.

"Given the sharp rise in actual output and new orders in June and July, it is reasonable for expectations to be more modest going forward," it added.    

Overall, business confidence in the non-oil private sector remained “subdued” in the context of 2018 so far during July.

"Nonetheless, the degree of optimism remained strong overall and improved since June. Marketing initiatives, new product launches and an expected economic upturn underpinned positive sentiment in the latest survey," Emirates NBD noted.