The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) eased slightly to 57.3 in December, from 57.5 the previous month. However, the latest figure signals that the rate of expansion in the Kingdom’s non-oil sector remains high and above the average registered in 2017, the bank said in a statement on Thursday.
Output and new orders increased at a sharp rate in December, while new export orders increased at the fastest pace in four months, the PMI report said. The backlogs-of-work index was at a five-month high, it added.
“The December PMI survey continued to show a strong rate of expansion in December, and the data suggests that non-oil growth accelerated in the final quarter of 2017, as well as for the year as a whole compared to 2016,” Khatija Haque, head of MENA research at Emirates NBD, said in the statement.
She added the bank expects 2017 headline GDP growth to be close to zero as substantial oil production cuts will offset the expansion in the non-oil sectors of the economy.
"We are more optimistic about growth prospects in 2018, however,” Haque said.
According to the PMI report, while the employment index rose slightly to 50.9 in December from 50.7 in November, it stilled pointed to relatively soft job growth last month. In fact, the job growth for the year has a whole has been the weakest since the survey began eight years ago, it said, adding that given the population demographics of the Kingdom, this is a worrying trend.
In terms of inflation, average cost burdens rose at a marked pace during December’s survey period. Increased demand for raw materials led suppliers to increase prices, the survey showed.
Selling prices only rose slightly overall amid strong competitive pressures in the non-oil private sector, the bank said.
Looking ahead, firms remain optimistic overall about the coming year, although the degree of optimism was weaker than in October and November, 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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