Saudi Arabia’s purchasing managers’ index (PMI) edged up 0.1 point to 55.6 in October, compared to the previous month, according to the latest survey by Emirates NBD and IHS Markit.
“The headline PMI index for Saudi Arabia has been broadly stable for the last four months, at a level which suggests solid growth in the non-oil sector,”Khatija Haque, head of MENA research at Emirates NBD, said in a statement.
“Encouragingly, firms were much more optimistic in October than they were in September, which bodes well for growth in the final quarter of this year,” she added.
Output and new orders increased at a sharp rate, with both sub-indices holding above 60 in October. New export orders were unchanged on average, indicating that the demand was largely domestic, the report said.
According to the firms surveyed, “strong market conditions” and “successful marketing campaigns” contributed to rising new work in October.
The average selling price index year-to-date is 50.4, close to the neutral 50 and below the series average, the report said. The input prices, meanwhile, have increased at a faster rate, with the index averaging 52.8 in January through October 2017.
“While employment did increase at the fastest rate in five months in October (index at 51.3), the overall pace of jobs growth is modest,” the report said.
The employment index averaged 50.8 year-to-October, lower than the same period last year and below the series average of 52.7, it added.
Business optimism, however, saw significant improvement in October, with the component reaching the highest level since May. Companies increased their purchasing activity at the fastest rate in six months as they anticipated stronger demand in the coming weeks. The rise in pre-production inventories was the strongest in the series history, the report noted.
According to the report, an improvement in business conditions will continue over the next three months, underpinned by the announcement of new economic reforms and initiatives in the Kingdom.
“Overall, we maintain our forecast of 0.5 percent real GDP growth in 2017, and we expect this to accelerate to 2.5 percent in 2018,” the report said.
The Emirates NBD PMI is based on data compiled from a survey of companies in manufacturing, services, construction, and other non-oil sectors. A level over 50 indicates an increase, while below 50 indicates contraction.
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