Saudi Arabia’s non-oil economy growth rises in August

Growth in Saudi Arabia’s non-oil private sector improved slightly in August, compared to July, as new orders increased at a faster rate supported by a solid rise in new export orders, Emirates NBD said in its latest PMI report.

The Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) rose to 55.8 in August from 55.7 in July. A level above 50 indicates expansion.

Survey participants attributed the strong rise in new orders and activity to “more projects and stronger underlying demand,” the PMI report said.

Output rose sharply in August, although at a slightly slower rate than in July.

Employment growth rate, on the other hand, was the slowest in four months, with the employment index slipping to 50.7 in August.

Input costs also rose at a slightly slower rate in August compared to July, driven by higher purchase costs. The overall input price index declined to 53.

“Some of the higher input costs were passed onto buyers, with selling prices rising modestly in August,” the report said.

The output price index rose to 51 last month, the highest reading since February.

The companies in Saudi Arabia are mainly optimistic about the coming year, the report said, although the degree of optimism slipped to the weakest level since October 2016.

“Overall, the August PMI survey shows a non-oil sector that remains robust, and is showing growth, which is in line with our expectations for 2017,” the report said.

According to Emirates NBD, the main challenge to overall GDP growth this year could come from crude oil output, which has declined compared to last year following OPEC’s agreed production cuts.