RIYADH: Growth of Saudi Arabia’s non-oil private sector eased in January, continuing the trend seen through much of the latter part of 2015.
Business conditions improved at the weakest pace in the survey’s six-and-a-half year history, with a muted rise in new work the key factor behind the slowdown, according to the latest Emirates NBD Saudi Arabia Purchasing Managers’ Index.
Total new business was restricted in turn by a negligible increase in new export orders. Similarly, relatively subdued growth was seen in output, employment and input buying. Meanwhile, purchasing costs rose only modestly, allowing firms to lower charges in an effort to attract new clients.
The headline Emirates NBD Saudi Arabia PMI slipped to a survey-record low (53.9) for the third time in the past four months during January. Previous low points came in October (55.7) and December (54.4), and the latest reading signalled a continuation of the general trend seen towards the end of 2015.
However, by remaining well clear of the neutral 50.0 mark, the index still signalled solid growth overall. Khatija Haque, head of MENA Research at Emirates NBD, said: “The slowdown in the non-oil sectors is in line with our expectations as the economy adjusts to lower oil prices and fiscal policy is adjusted accordingly.
“Global financial market volatility in the first weeks of 2016, and increased concerns about Chinese and global growth are likely to have weighed on sentiment, and may have contributed to the sharp slowdown in new export orders last month.”
Non-oil private sector employment in Saudi Arabia increased further during January. Contrasting with the overall slowdown, the rate of hiring picked up from December’s low. That said, jobs growth was still muted compared with the series trend. Meanwhile, latest data showed backlogs of work rising again, albeit only marginally.
On the price front, the rate of total input cost inflation was little-changed from the survey-record low seen in the final month of 2015. Purchase prices showed a similar trend, rising only modestly amid greater competition among suppliers.
