Saudi Arabia non-oil economy climbs to 13-month high

6 February, 2019 12:00 AM printer

RIYADH: Faster output growth and a rise in orders and employment lifted business conditions in Saudi Arabia’s non-oil private sector to their highest level in 13 months in January, as the government continues with efforts to boost investment and economic expansion, Emirates NBD said.

The headline seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) – a composite gauge designed to give a single-figure measure of operating conditions in the non-oil private sector economy – climbed to 56.2 in January, from 54.5 in December, report agencies.

The rate of new order growth was the quickest since December 2017, the Dubai lender said, driven by stronger domestic sales, continued inflows of business from overseas and ongoing price discounting by companies.

"Firms were able to reduce selling prices as their purchasing costs also declined in January," said Khatija Haque, head of Mena research at Emirates NBD. "Firms increased their quantity of purchases in January, probably reflecting stronger order growth, and stocks of pre-production inventory also rose the most since September 2018."

Meanwhile, business optimism about future output was its highest in more than five years in January, according to the tracker.

“The government has announced an ambitious budget for this year, with expenditure projected to rise more than 7 per cent, as well as a number of initiatives to boost investment and expansion in the non-oil sectors of the economy, which likely contributed to the positive business sentiment,” said Ms Haque. “The recovery in oil prices last month after a sharp sell-off in December 2018 likely also helped.”