Riyadh – Mubasher: The headline seasonally adjusted Saudi Arabia Purchasing Managers’ Index (PMI) registered 52.5 in February, down from 54.9 in January 2020, according to IHS Markit.
This is the lowest reading for the index since April 2018, as it marked the weakest improvement in overall business conditions for nearly two years, however, it remained above the 50-point reading that separates expansion from contraction.
The decline was attributed to slower rates of output and new business growth across the non-oil private sector in the kingdom last month, as per IHS Markit’s report.
“Higher levels of incoming new work have been recorded in each of the past 22 months, but the latest increase was the weakest seen over this period,” the report noted.
Lack of new sales enquiries resulted in receding pressure on business capacity, as shown by the sharpest drop in backlogs since September 2011.
On a more positive note, the survey showed a slight rebound in export orders, with new work from abroad rising for the first time in three months.
“New order growth continued to weaken despite efforts to stimulate sales through price discounting, which led to the weakest rise in non-oil private sector output since the survey began in August 2009,” said Tim Moore, Economics Associate Director at IHS Markit.
Some survey respondents noted that efforts to source components from outside mainland China, due to the new coronavirus epidemic, led to higher cost burdens.
“February data revealed additional challenges from international supply chain disruptions following the COVID-19 outbreak in China, with firms seeking to build up inventories and source alternative suppliers of critical components. As a result, survey respondents indicated longer lead times for the delivery of raw materials and the sharpest rise in purchasing costs for almost one-and-a-half years,” Moore added.
