Saudi Non-Oil Private Sector Growth Quickens to 7-Year High
(Bloomberg) -- Business activity in Saudi Arabia last month grew at the fastest pace in seven years as fewer Covid-19 restrictions led to a boost in the non-oil economy.
A Purchasing Managers’ Index compiled by IHS Markit rose to 58.6 in September from 54.1 during the previous month, the largest monthly gain in points on record. The acceleration was mainly attributed to faster growth in new orders.
- New business rose at the quickest pace in seven years because of a boost in domestic client demand.
- Growth in new orders from overseas was subdued in comparison to local growth.
- Output expansion quickened for the first time in four months.
- Employment figures saw only a marginal uplift but the pace of job creation was the fastest since June.
“After two successive falls, the latest reading showed that the economic recovery has stamina, and the relaxation of pandemic measures will release new waves of demand,” said David Owen, economist at IHS Markit. Still, output prices “rose only slightly in September, reflecting firms’ worries that they could be priced out of a competitive market. Overall cost pressures have remained modest so far but could intensify if raw material price rises spill over to more parts of the economy.”
In neighboring United Arab Emirates, the index posted a reading of 53.3 compared to 53.8 in August, remaining above the 50 mark that separates growth from contraction. As Expo 2020 begins, the country seems to be in “good shape,” said Owen. Although the PMI ticked down, it “still pointed to a strong improvement in non-oil business conditions, as firms continued to see a recovery in demand from the pandemic.”
In Egypt, the index declined to 48.9 from 49.8 in August, signaling the 10th straight monthly contraction as weaker customer demand took its toll on output and new orders.
The confidence in future activity, however, rose to the highest level in the nine-year history of the series, coinciding with “a faster vaccination program” and further easing of travel measures “that should aid tourism income in the fourth quarter,” Owen said.
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