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Saudi non-oil growth continues to surge

Saudi non-oil growth continues to surge

RIYADH: Saudi Arabia’s non-oil private sector output surged last month according the Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) data. PMI for the month rose to 55.5 from 55.0 in November, driven by faster output growth. The output index rose to 63.3 last month from 60.3 in November as nearly 30 per cent of firms surveyed reported higher output compared with November. New order growth was also strong (58.9), although marginally slower than November. Several firms cited new projects in the construction sector as a contributing factor to overall sales growth.

“The government’s payment of outstanding dues to corporates in November and December likely also supported increased activity in the non-oil sector. Export orders rose at a slightly faster rate in December on improving external demand, according to respondents,” said Khatija Haque, Head of Mena Research at Emirates NBD. In a challenging macroeconomic environment of lower oil prices and government spending cuts, average selling prices declined marginally in 2016 as firms competed on price to secure new work. However, input costs continued to rise, squeezing margins. Despite the strong growth in activity and sales, employment was broadly unchanged in December. The average employment index in 2016 was 51.2, lower than 52.4 in 2015 and 53.0 in 2014, signalling weaker job growth last year.