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Growth in Saudi non-oil private sector still robust in April

Non-oil industries saw strong growth but it is slowing. Picture: Creative Commons Creative Commons
Nearly 33 percent of business owners expect production and demand to increase in the following three months.

Saudi Arabia’s non-oil private sector continued to see robust growth in April, albeit at a slower pace than in March as fears over inflation began to weigh on demand, a survey showed on Monday.

The headline seasonally adjusted S&P Global Saudi Arabia Purchasing Managers’ Index (PMI) for the whole economy fell to 55.7 in April from 56.8 in March, for its lowest reading in three months.

“The Saudi Arabia PMI signalled another strong improvement in the health of the non-oil sector in April, but one that also showed the first signs of price pressures swaying clients’ spending decisions. The rate of new order growth was the softest recorded since January, as some panellists indicated a drop in sales due to recent increases in charges,” wrote David Owen, economist at survey compiler S&P Global.

The output sub-index also expanded at a still strong pace of 59.7 in April, although down from 62.4 in March and below the series average of 61.3.

“Indeed, a further marked uptick in output prices during April, in light of rising commodity prices and global inflation fears, risks dampening sales further in the coming months,” Owen said.

“Business confidence in future activity levels was down to a three-month low and one of the lowest ever recorded, indicating a marked degree of uncertainty over whether the current rate of output growth can be sustained”.

The employment sub-index, however, swung to growth in April after dropping slightly below the 50 mark that separates growth from contraction in March. The growth, while the quickest pace in 10 months, was marginal however.

Some respondents said additional workers were hired to boost capacity and employment rose in all four sectors covered by the survey.