Saudi Arabia: PMI falls to one-year low in May
June 3, 2015
The Purchasing Managers’ Index (PMI) elaborated by the Saudi British Bank (SABB) and HSBC fell from April’s 58.3 to 57.0 in May. Although the index hit a one-year low in May, the PMI remains well above the 50-threshold, indicating an expansion in business activity in the non-oil producing private sector.
May’s result suggests that despite remaining strong, economic dynamics in the non-oil private sector economy softened on the back of political headwinds. The conflict between the Saudi-led coalition against Houthi fighters in Yemen and the recent Islamic State attacks on Shiite mosques in the Kingdom have started to take its toll on business sentiment. According to SABB and HSBC, May’s print reflected weaker growth in output and new orders, with the latter weakening to the lowest level since September 2011. The rate of hiring followed suit and eased to a 10-month low. Conversely, as a result of the still-robust activity, purchases increased at a strong pace in May. Meanwhile, input prices accelerated in May.