Saudi private sector growth slows in September

Growth in Saudi Arabia’s non-oil private sector reached a four-month low in September, amid decline in output and new orders, Emirates NBD said in a new report.

The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers' Index (PMI) fell to 53.4 last month from 55.1 in August. A level above 50 means business is expanding and below 50, contracting.

Output growth slowed to 56.7 from 59.7, while growth of new orders declined to 55.1 from 59.0. However, client demand for goods and services across the Kingdom's non-oil private sector rose last month, thereby extending the current sequence of growth to five months.

"Despite the relative softness in the September survey, the PMI for Q3 was higher than in both Q1 and Q2 2018, with output and new work rising at a faster rate than in the first half of this year," noted Khatija Haque, head of MENA Research, Emirates NBD.

"However, this did not translate into faster employment growth and staff costs were flat on average in Q3. Margin pressure is evident as input costs have increased while selling prices have declined slightly."

According to Haque, the non-oil GDP growth in the third quarter was stronger than H1 2018.

“We remain optimistic that sustained higher oil production will support faster expansion in the non-oil sectors in Q4, particularly manufacturing, transport & logistics,” she added.

Meanwhile, employment growth slowed to a 10-month low of 50.7 from 51.0, as 97 percent of firms surveyed indicated "no change" in staffing last month.

Close to 40 percent of the firms surveyed expected their output to be higher in 12 months, the most since the May survey, the report said.