Saudi private sector growth hits 18 month high in February

Saudi Arabia’s non-oil private sector saw a further pick up in growth momentum in February, with business conditions improving at the quickest rate since August 2015, according to a new survey.

Data from the Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) showed that both output and new orders rose sharply in February, with the rate of expansion in the latter picking up to an 18-month high.

Subsequently, firms raised their input buying at a steep pace to accommodate higher output and due to projections of further improvements in market demand in the coming months.

Despite the robust upturn in new work, the rate of job creation remained only slight, however. On the price front, ongoing cost pressures led firms to raise their output charges for the fourth consecutive month, the survey added.

At 57.0, the headline seasonally adjusted Emirates NBD Saudi Arabia PMI was consistent with a marked improvement in operating conditions during February.

Up from 56.7 in January, the latest reading was also the highest in one-and-a-half years. However, it remained slightly below the long-run series average (58.3).

Khatija Haque, head of MENA Research at Emirates NBD, said: “Faster output and new orders were the main driver behind the higher PMI reading in February, signalling faster growth in the non-oil private sector last month.

“However this has yet to translate into increased employment in the sector. Nevertheless, firms appear to be relatively optimistic about prospects for the coming year.”

According to the survey, the overall improvement in the health of the sector was supported by sharper growth of new work during February. Anecdotal evidence highlighted that promotional activities, new projects, construction activity and stronger underlying demand had supported the upturn in new work.

The rate of job creation eased to a 14-month low and was slight overall. Marginal employment growth has now been recorded in each of the past six months. Consequently, backlogs of work accumulated at the fastest rate in 20 months.