Output, new orders boost Saudi PMI to two-year high in Nov

05/12/2017 Argaam

 

The Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) rose from 55.6 in October to 57.5 in November —the highest reading since August 2015.

 

Steep expansion in output and new orders contributed to the latest positive result of the seasonally adjusted headline index, the bank said in a statement.

 

“The strong November PMI reading is particularly encouraging given the heightened political uncertainty in the Kingdom, and indicates that it was largely ‘business as usual’ last month,” Khatija Haque, head of MENA research at Emirates NBD, said in the statement.

 

The survey was conducted from November 13 to 23, after the arrests of high-profile businessmen and officials earlier in the month.

 

“That output and new orders continued to increase sharply bodes well for non-oil sector growth in the fourth quarter. Higher oil prices likely contributed to the broadly positive business sentiment,” Haque added.

 

In November, output and new orders rose at the fastest rate in 2017, with firmer export demand contributing to overall new orders growth, the PMI report said.  

 

Employment growth, however, was modest and the sub-index eased to 50.7 in November —only slightly above the neutral 50-level.

 

Growth of new business accelerated in November, with the sub-index hitting a 27-month high.

 

Improvement in new work inflows was reported by 37 percent of the survey respondents.

 

New export order growth reached a three-month high last month. “Non-oil private sector firms commonly linked the rise in new orders from abroad to an economic upturn in neighboring countries,” the statement said.

 

Input cost inflation slowed from October, driven mainly by the higher cost of purchases.  Staff costs were marginally higher in November, and wage inflation year-to-date has been weaker than in 2016. “Despite higher input costs, average selling prices were unchanged in November, with firms citing competitive pressures,” the report said.   

 

According to the survey, businesses remain optimistic about the coming year, although the degree of optimism was slightly weaker than in October. 

 

Higher oil prices were seen as the main driver in the broadly positive business sentiment in Saudi Arabia.

 

“The PMI survey was much better than we had expected given the political developments at the start of last month, and supports the view (reflected by several political analysts) that the majority of businesses in the Kingdom view the anti-corruption drive as a positive development for Saudi Arabia’s economy, notwithstanding the increased near-term uncertainty,” the report said. 

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