Riyadh-Mubasher: Despite falling from 56.3 in November to 54.4, the headline Emirates NBD Saudi Arabia Purchasing Managers’ Index™ (PMI), a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy, remained indicative of solid growth in December.
However, the latest reading was a series low, and meant that the average for Q4-15 was also the weakest on record (55.4).
The cooling in the overall rate of expansion was reflected by softer output growth in December. The latest rise was the slowest since January, although it remained steep overall. Anecdotal evidence linked higher activity to new projects secured as a result of better marketing.
New business showed a similar trend in December, with growth still marked but easing to the weakest in the series history. The intensity of competition was reportedly a factor restricting new order growth at some firms, though panellists indicated that this was far outweighed by the gains from promotional activities. New export work continued to rise solidly, with some firms benefitting in international markets due to their reputations for quality.
Relatively slow growth of new work led companies to raise their purchasing activity at the weakest pace in more than two years. That said, the rate of expansion was still sharp overall, and sufficient to contribute to a further build-up of input stocks in December.
On the jobs front, the rate of hiring eased to near-stagnation at the end of the fourth quarter. It was the weakest in the current 21-month period of expansion, with the vast majority of respondents (97%) seeing no change in employment.
Total input costs faced by Saudi Arabia’s non-oil private sector firms increased further in December. The rate of inflation slowed to a record low, however, and was only modest overall. For the first time in over a year, purchasing costs rose at a weaker pace than salaries, as panellists pointed to greater price competition among suppliers.
Competitive pressures were also behind firms’ decisions to cut charges for the second straight month – the first back-to-back decline since 2013.
