Saudi non-oil private sector growth picks up in October

Saudi Arabia's non-oil private sector expanded at a modest pace in October, supported by growth in employment and new orders, Emirates NBD said in a new report on Monday.

The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers' Index (PMI) rose to 53.8 last month from 53.4 in September. A level above 50 means business is expanding and below 50, contracting.

Output growth slowed to 56.1 from 56.7, but growth of new orders rose to 56.7 from 55.1. Employment growth accelerated to a seven-month high of 51.3 from 50.7.

"The employment reading still indicated only a modest increase in jobs, with just 3.1 percent of firms indicating they had hired more staff last month," said Khatija Haque, head of regional research at Emirates NBD.

Staff costs, a good proxy for wages, remained below the neutral 50.0 level for the second month in a row, pointing to fractional wage deflation on average in the private sector, she added.

Output prices increased outright last month since July, while input prices fell outright for the first time since the survey was launched in August 2009.

However, business optimism about future output increased in October, with nearly half of all firms surveyed expecting their output to be higher in a year’s time, while the other half hoping current levels of output to be sustained.

“The rise in Brent oil prices to over $80 a barrel on average last month and a pre-budget statement by the government signaling higher state spending in 2019 contributed to improved business sentiment,” the report noted.