New or­ders pro­vide a lift for Saudi Ara­bia’s non-oil pri­vate sec­tor

The National - News - - BUSINESS - FA­REED RAH­MAN

The Saudi non-oil pri­vate sec­tor econ­omy fur­ther im­proved in Novem­ber on the back of con­tin­ued growth in work or­ders, ac­cord­ing to a new re­port from IHS Markit.

The head­line sea­son­ally ad­justed Saudi Ara­bia Pur­chas­ing Man­agers’ In­dex – a gauge de­signed to give a snap­shot of op­er­at­ing con­di­tions in the non-oil pri­vate sec­tor econ­omy – rose to 58.3 in Novem­ber, from 57.8 in Oc­to­ber, the high­est level in more than four years.

“Novem­ber’s PMI data for Saudi Ara­bia re­vealed a stronger im­prove­ment in un­der­ly­ing eco­nomic con­di­tions and, when cou­pled with the re­cent im­prove­ments in growth mo­men­tum, point to a faster rate of non-oil GDP ex­pan­sion for the fourth quar­ter of 2019,” said Am­rit­pal Virdee, an economist at IHS Markit.

“A bright spot was a quick­en­ing of over­all new or­der growth, which reached its fastest pace since April 2015. Stronger de­mand con­di­tions helped to out­weigh con­tin­ued weak­ness in job cre­ation and slower out­put growth.”

Con­fi­dence among non-oil pri­vate sec­tor com­pa­nies to­wards fu­ture out­put re­mained strong in Novem­ber thanks to pos­i­tive fore­casts of un­der­ly­ing eco­nomic con­di­tions and plans for im­proved prod­ucts. The de­gree of op­ti­mism was the high­est since April, the re­port said.

On the price front, the lat­est data showed the third in­crease in charges for goods and ser­vices in the past four months. How­ever, the rise in sell­ing prices was mar­ginal. Over­all in­put prices con­tin­ued to in­crease in Novem­ber, but the rate of in­fla­tion eased for the sec­ond month run­ning and was sub­dued by his­tor­i­cal stan­dards, the re­port said.

“Over­all, the pri­vate sec­tor econ­omy is well-placed as we look for­ward to 2020, with the sur­vey’s for­ward-look­ing gauge, the Fu­ture Out­put In­dex ris­ing to a nine-month high on the pace of new prod­uct ini­tia­tives and more pos­i­tive fore­casts for un­der­ly­ing de­mand,” added Mr Virdee.

Em­ploy­ment among non-oil pri­vate sec­tor com­pa­nies also rose in Novem­ber, though the rate of job cre­ation was mar­ginal and sub­dued by his­tor­i­cal stan­dards.

Un­der­pin­ning the pos­i­tive PMI read­ing was a fur­ther in­crease in out­put. Although steep, the rate of ex­pan­sion eased to the slow­est in four months dur­ing Novem­ber.

The re­port also found in­flows of to­tal new busi­ness in­creased at a faster pace in Novem­ber with the rate of growth steep and the quick­est since April 2015. This partly re­flected a fur­ther pickup in new ex­port or­ders, which in­creased at a sharper pace than in Oc­to­ber.

New or­der growth reached its fastest pace since April 2015. Stronger de­mand helped to out­weigh weak­ness in job cre­ation


The pri­vate sec­tor econ­omy of Saudi Ara­bia is well po­si­tioned for growth in 2020, ac­cord­ing to IHS Markit

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