Saudi non-oil sector PMI hits record low in March: ENBD

Non-oil private sector growth in Saudi Arabia slowed in March, reaching its lowest level since the Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) survey was launched in August 2009.

The seasonally adjusted Emirates NBD Saudi Arabia PMI fell to 52.8 last month from 53.2 in February, the bank said in a statement on Tuesday.

“That said, business confidence remained strong in the non-oil private sector and output growth picked up. Furthermore, input cost inflation continued to ease from the recent peak seen at the start of 2018,” it added.

Output growth rose to 58.6 from 56.9, but growth in new orders dropped to a record low of 50.5 from 52.9 due to the recent introduction of value-added tax (VAT) and competitive pressures.

Employment growth slowed moderately though remained above the average seen over the past 12 months.

“The fall in the pace of expansion in Saudi Arabia’s non-oil private sector to its lowest levels on record last month will prompt firms to continue price discounting in a bid to galvanize demand,” said Daniel Richards, MENA economist at Emirates NBD.

"Despite the sluggish growth at present, business optimism at 71.0 remains far above the 12-month average of 61.4,” he added.

Output prices fell for a second straight month in March to 49.9, while input price inflation slowed to 50.7.

"Although business confidence eased from the 46-month high registered in February, optimism remained ‘strongly positive’ overall.  An expected economic upturn alongside anticipated new project wins underpinned positive sentiment in March," the bank stated.