Saudi Arabia’s non-oil sector activity cooled off in July, following robust growth in the previous month due to a build-up in the backlog of projects, according to a new survey of companies.
The Emirates NBD Purchasing Managers’ Index for Saudi Arabia eased to 54.9 in July down from from 55 in June, according to the survey. Readings above the 50-mark indicate growth and below 50 signal contraction. The index is a composite indicator designed to give an overview of operating conditions in the non-oil private sector economy. The survey is sponsored by Dubai's biggest lender, Emirates NBD, and produced by IHS Market.
“Although the index has rebounded over the last couple of months, year-to-date the headline PMI averaged 53.4, well below the 56 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,” said Emirates NBD Mena research head Khatija Haque.
Despite a continuation of robust business conditions, backlogs increased due to delays in ongoing projects, with job creation in the non-oil private sector remaining historically subdued, the survey noted.
There was a softer increase in average cost burdens in July, due to easing input price pressures, with some firms seeking to boost client demand by offering discounts.
Business confidence in the non-oil sector also remained subdued for July compared with the performance so far this year. The survey noted that new marketing initiatives and product launches may reverse the lull as expected economic upturn continued to underpin positive investor sentiment.