Saudi Arabia PMI hits new low, Egypt stabilises

Saudi Arabia’s non-oil private sector continued to lose growth impetus, as indicated by the slowest improvement in business conditions in the survey’s near nine-year history. A contraction in new orders combined with easing job creation and softer output growth all contributed to the slowdown recorded in April. Furthermore, on the price front, input costs increased at a solid pace, whilst output charges fell for the third month running. Nonetheless, respondents remained confident towards the year ahead, with many noting that they expect the current slowdown to be temporary.

“The further softening of the non-oil activity data in April is surprising given the sharply higher oil prices so far this year, as well as the expansionary budget that was announced for 2018. Firms have cited subdued domestic demand as a reason for the decline in new orders last month, although export orders declined as well,” said Khatija Haque, Head of Mena Research at Emirates NBD. At 51.4 in April, down from 52.8 in March, the headline seasonally adjusted PMI slumped to a record low. That said, the figure remained above the crucial 50.0 mark that separates growth from contraction, and signalled a modest overall expansion in the sector since March.

PMI data for Egypt showed a stabilisation in business conditions in non-oil private sector. This reflected output stabilisation and growth of total new orders. On the price front, input cost inflation eased to the weakest since May 2015, while charge inflation was at a four-month low. “The PMI for Egypt broached the 50.0 level for only the second time in 31 months in April, indicating that the non-oil private sector is finally starting to contribute to the positive growth story underway in the country.” said Daniel Richards, Mena Economist at Emirates NBD.