New orders boost Saudi private sector
Egypt PMI in positive territory for second successive month
Saudi Arabia’s non-oil private sector activity improved last month as the headline PMI rose to 55.1 in August from 54.9 in July, on stronger output and new orders growth.
However, employment growth was modest, and the slowest in three months, while average selling prices declined for the second month in a row, as firms offered promotions to stimulate demand.
“The survey data suggests that the pace of non-oil private sector growth in the Kingdom has accelerated in the last three months, relative to the first five months of the year. Nevertheless, the rate of expansion so far in 2018, measured by the average PMI reading for January through August, is markedly weaker than for the same period last year, and in fact the slowest on record,” said Khatija Haque, Head of Mena Research at Emirates NBD.
The output and new work indices rose to their highest levels so far this year at 59.7 and 59 respectively, but as with the headline PMI, year-to-date both components remain well below previous years’ averages.
Export orders increased only marginally in August, and some firms noted that domestic demand was supported by promotional activity. This is also reflected in the output price index, which showed a decline in average selling prices for the second month in a row, despite higher input costs.
Employment growth was also relatively modest in August, with just 2 per cent of firms surveyed reporting increased hiring. Staff costs (wages) were unchanged on average last month. On the whole, firms surveyed were optimistic about their future output, with 17 per cent firms expecting their output to be higher in a year’s time. However, this is a slightly lower percentage than in July.
Egypt’s numbers
Egypt’s headline PMI reading of 50.5 in August was the first time since September 2015 that two consecutive months have returned positive readings, suggesting that the nonoil private sector is beginning to see the protracted recovery from this fiscal year.
The latest reading highlighted a further improvement in operating conditions across the nonoil private sector, albeit one that was only marginal. The above 50.0 PMI reading was supported by new orders rising for a second consecutive month.
There were reports that greater demand from domestic and international markets underpinned the latest rise in new business. That said, the expansion was marginal.