Saudi Arabia: PMI climbs to an over one-year high in January
February 5, 2019
The Purchasing Managers’ Index (PMI), sponsored by Emirates NBD and produced by IHS Markit, rose from 54.5 in December to 56.2 in January. The result marks the strongest reading since January 2018. Therefore, the index remained well above the 50-threshold that indicates expansion in business activity in the non-oil producing private sector.
The improvement in business conditions reflected stronger new orders, mainly due to robust domestic books as export orders were broadly unchanged from the previous month. Moreover, healthy overall order books supported purchasing activity. Although the output index improved slightly in January, it remains well below the long-term average. On crucial job conditions, the survey, “showed only a modest rise in private sector jobs and wages last month”. Regarding price developments, fierce competition is pushing down selling prices.
Looking forward, Khatija Haque, head of MENA research at Emirates NBD, commented that:
“The government has announced an ambitious budget for this year, with expenditure projected to rise more than 7%, as well as a number of initiatives to boost investment and expansion in the non-oil sectors of the economy, which likely contributed to positive business sentiment. The recovery in oil prices last month after a sharp sell-off in December 2018 likely also helped.”
Saudi Arabia Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment rising 4.3% in 2019, which is unchanged from last month’s estimate. For 2020, the panel expects fixed investment to increase 5.4%.