Saudi non-oil growth edges higher in April

Growth in Saudi Arabia’s non-oil sector rose marginally in April, with expansion in new work and business activity gaining momentum, Dubai-based Emirates NBD said in its latest Purchasing Managers’ Index (PMI) report.

The Kingdom’s PMI rose to 56.5 in April, from 56.4 in March, as firms engaged in more purchasing activity, which contributed to higher inventories. The rate of inventory accumulation jumped to a 55-month high.

“This was another overall strong reading of Saudi Arabia’s non-oil private sector activity, with output and new orders growth both very firm in April,” said Tim Fox, head of research and chief economist at Emirates NBD.

“However, below the surface it remains clear that companies [have] to work harder to generate these gains, with little capacity to increase employment and profit margins continuing to be squeezed.”

The rate of job creation remained only marginal, despite greater pressure on operating capacity, the report said.

Meanwhile, input cost inflation surged to its highest level in eight months, even as selling prices rose only fractionally amid tough competition.

New business inflows rose sharply, with anecdotal evidence suggesting that companies’ sales and marketing efforts supported an upturn in domestic demand.

On the other hand, new export work fell for the first time in ten months, although the rate of contraction was marginal overall.

Non-oil private sector firms in the Kingdom saw lower foreign demand and fierce competition in external markets, according to survey participants.