Saudi non-oil growth drops to six-month low in May

Growth in Saudi Arabia’s non-oil sector slipped to a six-month low in May, as tough competition in external markets weighed on export orders, Emirates NBD said in a report on Monday. 

The headline seasonally adjusted Emirates NBD Purchasing Managers’ Index (PMI) fell to 55.3 in May, from 56.5 in April, the report said.

“The decline in Saudi Arabia’s PMI in May was largely due to slower new orders growth, with export orders in particular showing weakness,” said Khatija Haque, Head of MENA Research at Emirates NBD.

As new export orders fell for the second month in a row amid fierce competition overseas, growth in total new work was led by the domestic market, the report said.

On the price front, cost inflation dropped to a survey-record low, which led to selling prices declining marginally. Some firms offered discounts as a result.

Meanwhile, payroll numbers increased further in May, with the rate of job creation at its strongest since August 2016, but only marginal, the report said.

“While the non-oil sector has seen stronger growth so far this year compared to 2016, the downside risks to overall GDP growth have increased with the extension of OPEC’s production cuts for a further nine months,” Haque said.

OPEC and non-member countries agreed late last month to extend their deal limiting crude production until March 2018. The countries had agreed in December 2016 to cut output by a combined 1.8 million barrels per day for six months, in order to shore up crude prices and ease a global glut in the market.