Saudi Arabia: PMI edges down marginally in July
August 12, 2018
The Purchasing Managers’ Index (PMI) sponsored by Emirates NBD and produced by IHS Markit inched down to 54.9 in July from 55.0 in June. Nevertheless, the index remains above the 50-point threshold that indicates expansion in business activity in the non-oil producing private sector.
July’s marginally softer print came on the back of easing new orders and output. That said, both remained strong in comparison to levels seen earlier this year. In response, staff hiring picked up modestly in July, but wage growth remained subdued. Meanwhile, inventories rose at the fastest pace year-to-date and backlogs of work also increased notably, with some firms noting delays in projects as a contributing factor.
In terms of prices, input cost inflation moderated in July, and output prices were broadly stable.
Khatija Haque, head of MENA research at Emirates NBD, commented:
“Although the index has rebounded over the last couple of months, year-to-date the headline PMI averaged 53.4, well below the 56.0 average for the same period last year, which indicates a much slower rate of growth in the Kingdom’s non-oil private sector so far this year. However, oil production has increased sharply in the last couple of months […] This would typically filter through to higher oil-related manufacturing, transport and storage and utilities sectors, boosting non-oil sector growth as well.”
Author: Lindsey Ice, Economist