Saudi non-oil sector sees modest growth in February: PMI

Business conditions in Saudi Arabia’s non-oil private sector saw modest improvement in February, with Emirates NBD Saudi Arabia Purchasing Managers’ Index rising marginally to 53.2 last month as compared to 53 in January.

Output increased at a slightly faster pace in February, but new order growth slowed sharply – with the sub-index at the lowest level in the survey history (52.9), Emirates NBD said in the survey report.

“While the pace of expansion in Saudi Arabia’s non-oil sector was slow by historical standards in February, firms were much more upbeat about prospects for the coming year, citing new project wins and stronger growth prospects,” said Khatija Haque, head of MENA research at Emirates NBD.

“However, demand remained softer than in Q4 2017, prompting firms to cut selling prices last month by the most since the survey began in August 2009,” she added.

Purchasing activity continued to slow after rising in Q4 2017 before value-added tax (VAT) came into effect, the report said. Stocks of inventories increased in February, reflecting slower new order growth. 

Input price inflation softened to a three-month low during February’s survey period, falling below the long-run average, as the impact of VAT was reflected in the January readings, the report said. 

Meanwhile, output prices fell sharply in February, with this index declining to 47.6 – the lowest level on record – as firms cut prices to hold on to market share.

Job creation in the country’s non-oil private sector continued last month, extending the current sequence of growth to 47 months. The latest expansion was modest overall, the bank said.

The PMI is based on data compiled from replies to questionnaires sent to non-oil private sector companies. The 50-point level separates expansion from contraction.