Saudi Business Climate at 10-Month High; Egypt Growth Slows
(Bloomberg) -- Business activity in Saudi Arabia grew at the fastest pace since the beginning of the year, fueled by a sharp rise in sales and strengthening sentiment.
In Egypt, activity posted a third month of growth but at a slower rate, as confidence for the year ahead hit a record low on fears over the impact of a second wave of the virus on global markets.
Non-oil private sector activity in Saudi Arabia rose to the highest level since January, according to IHS Markit’s Purchasing Managers’ Index. The gauge was well above the 50 mark that separates growth from contraction.
It’s welcome news for the kingdom, but there’s still catching up to do in order to overcome the coronavirus slowdown, the report said. Concerns that the virus may flare up again still cloud the outlook. Meanwhile, employment figures returned to growth last month, though “only fractionally overall,” according to the report.
The Saudi PMI “pointed to an economy getting back on its feet in November,” wrote David Owen, economist at IHS Markit. “However, most of the key series remain off their trend level, hinting at a continued gap between the economy’s current conditions and its pre-Covid momentum.”
In Egypt, the upturn was “softer” than the 73-month record set in October, IHS Markit said. Jobs continued to be cut, although at the slowest rate in 13 months as rising orders and increased backlogs led some companies to expand workforces.
All the same, “Egyptian firms were the least optimistic about future output in the series history, amid concerns that activity could weaken if Covid-19 cases rise again domestically,” Owen said, with just 12% of panelists expecting growth.
The survey was conducted in mid-November, before positive news on vaccine trials and announcements of immunization campaigns in some countries.
- Saudi PMI rose to 54.7 from 51 in October, the strongest improvement since January
- An increase in new work and better market conditions were highlighted, while both domestic and foreign sales rose, marking only the second upturn in new export orders since February
- Business confidence rose to the highest in 10 months, as companies were encouraged by an easing in lockdown measures and news about effective vaccines
- Some firms delayed payments to suppliers as cash flow was still weak and there were reports of low raw material supply leading to increased cost pressures
- Egypt’s PMI was 50.9 from 51.4 in October
- Rate at which delivery times shortened was the joint-fastest since the survey began in April 2011
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