Saudi Arabia records strong growth in non-oil private sector in March

Saudi Arabia's non-oil private sector recorded strong growth in March, driven by the fastest increase in new orders since April 2015 and an increase in the company's production, said the latest tool for monitoring economy of Emirates NBD for the kingdom.

Saudi Arabia's seasonally adjusted purchasing manager index, based on the Dubai lender, is a composite indicator designed to provide insight into the operating conditions of the non-oil private sector. It went from 56.6 in February to 56.8. A reading above 50 indicates an expansion, below 50 indicates a contraction.

The PMI index was the highest since December 2017 and one of the fastest growing in terms of growth for three and a half years.

"The average PMI for the first quarter of 2019 was 56.5, which indicates the largest quarterly expansion of the non-oil private sector since the fourth quarter of 2017," said Khatija Haque, head of research at Mena to Emirates NBD.

The improvement in March was driven by the fifth consecutive monthly increase in new business, the highest since April 2015, the PMI revealed. Respondents said the recovery reflected more favorable market conditions and stronger sales efforts, including improved product offerings and competitive prices to attract customers.

The new orders subindex reached its highest level in nearly four years and the new production subindex reached its highest level in seven months, according to the tracker. At the same time, new export orders rose for the first time in three months, albeit marginally, as domestic demand continued to stimulate growth.

Output growth also rose, reaching its highest level in seven months, while remaining below the series average, while rising economic activity generally prompted companies to strengthen their inventories. Overall business confidence remained very positive, although it eased slightly from January's peak, said ENBD.

Despite a pick-up in demand, hiring levels in the non-oil private sector fell in March after five consecutive years of growth, and producer prices fell for the fifth consecutive month as companies seek to remain competitive. .

"The rebound in new orders and corporate output over the last few months has not resulted in employment growth." The private sector has only retreated for the third time from the 39 story of the series last month, "said Ms. Haque.

"It also seems that companies have very limited pricing power, their selling prices dwindling. [although only marginally] for the fifth consecutive month. "

That said, most companies have left their selling prices unchanged, she added. The data also show a slight increase in overall business operating expenses, reflecting a slight increase in purchase prices and staff salaries.