Saudi PMI down to 56.6 points in September: S&P Global

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Saudi Arabia’s Purchasing Managers’ Index (PMI) cut 1.1 points in September to reach 56.6 points, compared to 57.7 points in August, S&P Global said in its latest report.

Despite the decline in index and recording a slower rate of expansion, it indicated an improvement in the conditions of the non-oil private sector for the 25th consecutive month.

Output and new orders – the main components of the index – remained within the positive trend during September and witnessed an expansion at strong rates. With the increase in production and demand requirements, purchasing activity increased, as companies sought to maintain inventory levels in light of the current and expected high demand for sales, as a result of which purchasing inventory increased.

Non-oil companies registered another round of strong inflation in input prices, and procurement cost inflation was the main driver of higher overall operating expenses, amid reports of another hike in prices of raw materials with global sources. In addition, employment expenses increased but marginally and at the slowest rate since June, while construction companies recorded the largest rise in costs, the report added. 

Production price inflation continued as a result, as companies responded to higher operating costs during September, yet the rate of rise was modest, as companies wanted to maintain pricing policies that ensured continued competition in the market.

The report also noted that companies have maintained a high degree of confidence that output will continue to increase over the next 12 months, and this has been linked to expectations of continued powerful sales with an increase in the volume of new business inquiries and a high probability of acquiring new business, yet confidence levels have been slightly low and have fallen dramatically since May.