Saudi Arabia: PMI rebounds in May from April's all-time low
June 6, 2018
The Purchasing Managers’ Index (PMI) sponsored by Emirates NBD and produced by IHS Markit rose from 51.4 in April to 53.2 in May. April’s print had represented the lowest print since the series began in August 2009. Therefore, the index remains above the 50-threshold that indicates expansion in business activity in the non-oil producing private sector.
May’s increase was driven by stronger new orders, which translated into faster output growth. That said, output growth was well below the long-run average. Overall, business conditions remain weak, negatively affecting job creation, which fell to a six-month low. While purchasing activity returned to growth in May, the pace of expansion was modest.
On the price front, lower staff costs and moderate purchase prices led input prices to ease in May. Conversely, output charges increased for the first time in four months.
Khatija Haque, Head of MENA Research at Emirates NBD, added that:
“While the May PMI posted the highest reading this year, the index is still low by historical standards and reflects a slower rate of growth in the non-oil private sector than last year. The survey data suggests that government spending and higher oil prices year-to-date are not boosting economic activity as much as they have in the past, although firms remained highly optimistic about their future prospects.”
Saudi Arabia Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment rising 1.5% in 2018, which is unchanged from last month’s estimate. For 2019, the panel expects fixed investment to increase 4.6%.