RIYADH: Business conditions in Saudi Arabia’s non-oil private sector improved to their highest level since December 2017, driven by a strong rise in output and new orders, according to Emirates NBD’s latest survey.
The latest Saudi Arabia Purchasing Managers’ Index (PMI) – a composite indicator produced by Dubai's largest lender with IHS Markit, which provides a snapshot of operating conditions in the non-oil private sector economy – rose to a 14-month high of 56.6 in February, from 56.2 in January. This brought the headline index closer to its long-run average of 57.6 since August 2009, although non-oil growth in the kingdom is still weaker than in previous years, Emirates NBD said, report agencies.Growth in February was driven by the sharpest increase in new business since August 2015, and by new order growth rose to a three-month high, according to the index. Export sales were down on the month, indicating that stronger demand came principally from the domestic market.
Overall operating expenses of firms were little changed in February, as a slight rise in average staff pay was offset by a similarly marginal fall in purchasing costs. Average prices charged for goods and services were stable. A decrease in selling prices has been recorded in each month since last November; however, in February fewer firms reported offering discounts amid stronger underlying demand.
Meanwhile, overall input costs eased for the second month in a row, providing some relief for firms’ margins as selling prices were broadly stable, Emirates NBD said. There was also an uptick in purchasing activity, as businesses sought to reflect higher output requirements.
“Businesses increased their stock of pre-production inventories at the fastest rate since September, likely reflecting both the rise in new orders and optimism for future order growth – more than half of firms surveyed expect their output to be higher in a year’s time [than now],” said Khatija Haque, head of Mena research at Emirates NBD, in a statement on Tuesday.