Saudi Arabia: Non-oil PMI continues to climb in February
March 5, 2019
The Purchasing Managers’ Index (PMI), sponsored by Emirates NBD and produced by IHS Markit, rose from 56.2 in January to 56.6 in February. The result marks the strongest reading since December 2017. Therefore, the index remained well above the 50-threshold that indicates expansion in business activity in the non-oil producing private sector.
The main driver behind February’s gain was stronger new orders, mainly due to robust domestic books as export orders declined for the second consecutive month. Stronger demand led to an increase in the output index as well as buttressed purchasing activity. Despite February’s healthy reading, firms appeared to be reluctant to boost hiring, with the employment index rising only slightly. Regarding price developments, “A decrease in selling prices has been recorded in each month since last November; however, in February fewer firms reported offering discounts amid stronger underlying demand.”
Looking forward, Khatija Haque, head of MENA research at Emirates NBD, commented that:
“Businesses increased their stock of pre-production inventories at the fastest rate since September, likely reflecting both the rise in new orders as well as optimism for future order growth – more than half of firms surveyed expect their output to be higher in a year’s time.”
Saudi Arabia Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment rising 4.7% in 2019, which is down 0.3 percentage points from last month’s estimate. For 2020, the panel expects fixed investment to increase 5.2%.