Saudi PMI edges lower in Sept. as order growth slips

Growth in Saudi Arabia's non-oil private sector eased slightly in September but was broadly stable, a survey by Emirates NBD showed on Tuesday.

The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers' Index edged down to 55.5 last month from 55.8 in August. A level above 50 means business is expanding.

“Although the reading continued to signal a sharp improvement in the health of the sector, the headline PMI continued to score below the long-run average,” the report said.

New order growth slipped from last month although output growth accelerated. The employment index remained unchanged at 50.7 last month, indicating only a marginal rise in jobs.

While business optimism also improved from August, it remains well below the series average.   

"The PMI for Saudi Arabia has been relatively stable in Q3, signalling a solid expansion in non-oil sector growth last quarter," said Khatija Haque, head of regional research at Emirates NBD.

According to her, the announcement of key reforms and a successful $12 billion debt issue (by the government) in late September should have a positive impact on both sentiment and business activity in the coming weeks.

Year-to-date, the Saudi PMI has averaged 55.9, higher than the same period last year but well below the series average of 58.1.  “This suggests to us that non-oil GDP growth in the Kingdom so far this year is likely to be stronger than 2016, but weaker than we have seen in the last few years (pre-2015).”