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The latest Purchasing Managers Index (PMI) data indicated further expansion of the Saudi non-oil economy at the start of the third quarter of this year, after output grew strongly, supported by strong increase in new trade flows. .
However, the PMI report, released on Tuesday, said employment levels rose only partially in July, with companies continuing to report excess production capacity despite rising sales, and expectations for growth. Employment were also affected due to lower future production expectations to the lowest level. Repeated for over a year.
Saudi Arabia’s seasonally adjusted IHS Markit PMI fell for the first time in four months, from 56.4 points in June to 55.8 points in July.
The decline was led by weaker growth in production, new orders and employment compared to the previous month.
However, the reading indicated a strong improvement in trading conditions which led to the extension of the current growing period to 11 months.
Production in the non-oil sector maintained a steady pace of growth in July, despite slowing for the second consecutive month, and nearly 27% of companies surveyed reported an increase in activity, an increase linked to the strengthening customer demand and the relaxation of measures related to the epidemic.
While the rate of growth of new orders slowed from the highest level in June in 5 months, it was also strong in July, and higher demand from domestic and foreign customers supported this upward trend, as some companies have linked to competitive pricing strategies.
In contrast to these largely positive results, employment data reflected a less positive view of the non-oil sector in July. the order book is large, indicating a significant gap between demand and full capacity despite the sharp increase in new orders in recent months.
The companies included in the study were also less optimistic about an increase in activity over the next year, and only 10% of companies gave positive expectations, while around 87% expected no change. .
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