The survey, sponsored by Emirates NBD and produced by Markit, contains original data collected from a monthly survey of business conditions in the Saudi private sector.
“The latest PMI survey is encouraging, and suggests that the slight slowdown we’ve been seeing in the region’s largest economy since March is now over. Despite global oil prices remains low, the pace of expansion in Saudi Arabia’s non-oil economy still appears robust, and coupled with rising oil output, will prove supportive to headline GDP growth in H2,” Jean-Paul Pigat, Senior Economist at Emirates NBD, said.
After adjusting for seasonality, the headline Emirates NBD Saudi Arabia Purchasing Managers’ Index™ (PMI) – a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy – posted 57.7 in July, up from a survey-record low of 56.1 in June. The latest figure was the highest in three months, and consistent with a robust improvement in business conditions. It was also broadly in line with the average recorded so far this year (57.9).
Underpinning the overall expansion was faster growth of both output and new orders in July. Activity rose at the quickest rate since March, while data also highlighted a sharp rise in new work. There were reports that higher sales volumes and new marketing initiatives had helped to strengthen demand conditions, which in turn provided a boost to output growth.
According to survey data, the latest increase in total new business was supported by another marked rise in new export orders. Growth quickened to a four-month high, having eased to the weakest in a year during June.
Purchasing activity rose in line with new orders and business requirements in July. The rate of expansion was strong compared with the series average and marked overall. As a result, input stocks continued to rise, albeit more slowly than in the previous month.
Sharper growth of output and new work had little impact on payroll numbers, however, as the respective index for employment slipped to a 14-month low. The reading pointed to only a modest rate of job creation in July.
Meanwhile, total input costs faced by Saudi Arabia’s non-oil private sector firms rose further in July, continuing the trend observed throughout the survey’s six-year history. The rate of inflation accelerated to the quickest since last September, helped by increases in both purchase prices and staff costs during the month. That said it remained muted in the context of historical data.
Subsequently, charges increased for the third straight month in July. Although modest overall, the latest rise was the fastest since November 2014 and those companies that raised selling prices commented on higher input costs.