Saudi Arabia's PMI dips to lowest level on record

Saudi Arabia’s Purchasing Managers’ Index (PMI) declined to 54.4 in December, its lowest level on record due to slowdown in output expansion, new orders, and employment, Emirates NBD said in its latest PMI report.

Business conditions in the kingdom improved at the slowest pace in the survey’s history.

The average PMI for the fourth quarter of 2015 also settled at a low of 55.4, data showed. In November, the kingdom’s PMI stood at 56.3.

“Meanwhile, data for prices highlighted the impact of increased competition on both input costs and output charges. Cost pressures were the least marked since the survey began in 2009, while tariffs fell for the second month running,” the survey report said.

Purchasing costs also rose at a weaker pace than salaries – a first in over a year.

According to the research, the rate of hiring neared stagnation at the end of Q4. It was the weakest in the current 21-month period of expansion, with 97 percent of survey respondents seeing no change in employment.

Growth of new business in December was the weakest on record, the report added, attributing the slowdown to intense competition.  

New exports, however, marked an increase with some companies benefitting in international markets.

“The latest PMI data show that although growth momentum has slowed in Q4 2015, the non-oil private sector still expanded at a solid rate at the end of last year. This is consistent with the official estimate for non-oil private sector growth of 3.7 percent, which was released with the 2016 budget at the end of December,” said Khatija Haque, head of MENA Research at Emirates NBD.

The low figures could be an indication of weak oil prices, London-based consultancy Capital Economics (CE) said in its latest analysis.

“The slowdown in activity at the end of last year may have reflected deterioration in sentiment in light of the latest drop in oil prices,” CE said.