Saudi PMI hits new low in April as growth slumps

Growth in Saudi Arabia’s non-oil private sector reached a new low in April, amid a continuing slowdown in business conditions, Emirates NBD said in a new report.

The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers' Index (PMI) fell to 51.4 last month from 52.8 in March. A level above 50 means business is expanding and below 50, contracting.

A contraction in new orders combined with easing job creation and softer output growth all contributed to the slump recorded in April, the report said.

Output growth slowed to 56.0 from 58.6, while new orders fell to 49.6 -- the first drop below 50 since the survey's inception in August 2009.

Companies blamed the fall in order books on competitive pressures alongside subdued market demand, the bank noted.

Employment growth slowed slightly to 51.2 though many firms said they hired additional local staff in response to the Saudization government policy.

“The further softening of the non-oil activity data in April is surprising given the sharply higher oil prices so far this year, as well as the expansionary budget that was announced for 2018,” said Khatija Haque, head of MENA Research at Emirates NBD.

"Firms have cited subdued domestic demand as a reason for the decline in new orders last month, although export orders declined as well," she added.

Meanwhile, Emirates NBD said foreign sales continued to decline for the third month in a row, albeit at only a marginal rate.

Output prices fell outright in April for the third straight month, but input price inflation rose to 53.4 from 50.7, it added.