Riyadh – Mubasher: Saudi Arabia’s non-oil private sector returned to growth in September, as the economy continued its path to recovery after the coronavirus (COVID-19) pandemic lockdown.
Indices for output, new business, and exports signalled renewed expansions at the end of the third quarter (Q3), whereas employment fell at the softest rate since March.
Meanwhile, Saudi firms saw a much weaker rise in input costs last month, as the impact of a hike in value-added tax (VAT) eased considerably since August. Output charges also rose more slowly.
The headline seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) rose to 50.7 in September, indicating a slight improvement in the health of the non-oil private sector.
After dipping to 48.8 in August, the latest reading marked the first monthly expansion since February, prior to the COVID-19 pandemic and lockdown restrictions.
Commenting on the latest survey results, an economist at IHS Markit, David Owen, said: “Despite some businesses continuing to see a drag from ongoing restrictions, most companies saw market conditions improve. In addition, the impact of a rise in VAT notably softened, after a sharp rise in prices and a dip in sales were seen in August. Cost inflation eased to just a marginal pace.”
Moreover, Saudi firms saw a growth in new work in September, as the loosening of COVID-19 restrictions led to an upswing in demand. Nonetheless, the rate of new order growth was only modest.
Job markets remained weak in September, as indicated by an eighth successive monthly fall in employment.
On pricing, the latest data indicated a far softer rise in cost pressures at the end of Q3, after several firms reported higher input prices in August due to a mark-up in VAT rates.
"Going into the final quarter of 2020, it is nonetheless clear that the economy has some way to go to fully recover. Output growth remains well below normal, and jobs are still falling, albeit at a slower rate. Firms will require consistent rises in sales to support a strong end to the year," Owen concluded.
