The Saudi Arabian non-oil economy benefited from a slight rise in October, in part from higher order demand from overseas, as well as growth in employment. This according to the latest report from Emirates NDB‘s recent update of the Purchasing Managers Index (PMI) in November.
The PMI is a composite index that provides an overview of the current ‘state of affairs’ in all non-oil related private sector activities. The index noted a slight gain in October, from 53.4 to 53.8. While the gain is not enormous, it does indicate growth, which in difficult times is an achievement to be noted. The PMI is considered a good source of guidance, and any reading above 50 generally denotes growth in non-oil markets.
Additionally, October’s PMI noted an uplift of optimism among non-oil businesses. Fully half of all companies surveyed had expectations that their outputs would be higher in the coming year, which offers encouragement to those operating and/or investing in non-oil markets in the Kingdom.
Head of MENA research for Emirates NBD, Khatija Haque says “new export orders also recovered after contracting in September, reflecting increased external demand; however, output rose at the slowest rate since April, suggesting that the rise in new work has yet to feed through to actual output”. She added that on year-to-date comparisons, the data suggests “that non-oil sector growth has been slower than in 2017″, though continued by stating that it is, “likely to be offset by stronger oil sector growth, as the Kingdom ramps up oil production”.
Haque continued optimistically by stating that, “the rise in Brent oil prices to over $80 per barrel on average last month – the highest level since October 2014 – likely contributed to improved business sentiment, and the government also signaled increased budget spending in 2019 in its pre-budget statement released in October”.