Riyadh, April 5th, 2016: Growth of Saudi Arabia's non-oil private sector accelerated in March, but remained only slightly quicker than the survey-record low seen at the start of the year. Higher output was the main driver of the overall improvement in business conditions - the latest rise was the sharpest in four months. New orders, employment and input stocks also increased, but the respective rates of expansion were among the weakest in the series history. With regard to prices, firms pointed to the downwards impact of competition. Input costs rose at the slowest pace on record, while charges fell for the fifth straight month.
The survey, sponsored by Emirates NBD and produced by Markit, contains original data collected from a monthly survey of business conditions in the Saudi private sector.
Commenting on the Emirates NBD Saudi Arabia PMITM, Khatija Haque, Head of MENA Research at Emirates NBD, said.
"The March PMI points to solid growth in Saudi Arabia's non-oil sector, despite low oil prices and budgetary pressure. Output and order growth remain robust, which is encouraging, although this is likely underpinned by still high oil production feeding through to the related manufacturing industries. Nevertheless, we expect GDP growth in the Kingdom to slow to 1.9% this year from 3.4% in 2015."
Key Findings
- PMI edges up from 54.4 to four-month high of 54.5
- Robust expansions in output and new orders
- Weakest rise in total input costs since series began in 2009
The headline seasonally adjusted 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 - edged up to 54.5 in March, from 54.4 in February. The latest reading signalled a further pick-up in growth since the record low seen in January (53.9), but it was still well below the long-run trend (58.7). As a result, the improvement in business conditions in Q1 (54.3) was the weakest on average since the survey began in 2009.
The rise in the headline index was underpinned by output growth in March. Activity increased at the strongest rate in four months, with better marketing and new project start-ups cited as the key contributing factors.
In contrast, growth of new business eased at the end of the first quarter. Though still robust overall, the rate of expansion was the second-weakest in 80 months of data collection. Some panellists commented on a slowdown in market conditions stemming from low oil prices. Nonetheless, there were multiple reports of improving client demand. New export work showed a similar trend, with the latest increase solid but slower than the long-run average.
Saudi Arabia's non-oil private sector firms raised their input buying in line with higher output requirements during March. The latest increase was the quickest so far in 2016, but still subdued in the context of historical data. Subsequently, the rate of pre-production inventory building was one of the slowest in the series history.
Jobs growth moderated to a three-month low in March. The vast majority of monitored companies (96%) reported no change in staffing levels since February. Meanwhile, outstanding business rose only fractionally.
Finally, amid reports of increased supplier competition, the rate of input price inflation eased to a survey-record low in March. This ensured that charges fell for a fifth successive month, thereby extending the longest sequence of decline since the survey's inception back in 2009. Competitive pressures were again at work, leading firms to cut tariffs in order to attract new clients.
-Ends-
The next Saudi Arabia PMI Report will be published on May 3rd 2016 at 08:30 (RIYADH) / 05:30 (UTC)
For further information, please contact:
Ibrahim Sowaidan
Head - Group Corporate Affairs
Emirates NBD
Telephone: +971 4 609 4113 / +971 50 6538937
e-mail: ibrahims@emiratesnbd.com
Tricia Kaul
ASDA'A Burson-Marsteller; Dubai, UAE
Tel: 971-4-4507600; Fax: 971-4-4358040
Email: tricia.kaul@bm.com
Khatija Haque
Head of MENA Research, Emirates NBD
Email: KhatijaH@emiratesnbd.com
Joanna Vickers
Corporate Communications
Markit
Tel: +44-207-260-2234
Email: joanna.vickers@markit.com
Philip Leake
Economist
Markit
Tel: +44-1491-461014
Email: philip.leake@markit.com
The Emirates NBD Saudi Arabia Purchasing Managers' Index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 private sector companies, which have been carefully selected to accurately represent the true structure of the Saudi non-oil economy, including manufacturing, services, construction and retail. The panel is stratified by Standard Industrial Classification (SIC) group, based on industry contribution to GDP. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the 'Report' shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the 'diffusion' index. This index is the sum of the positive responses plus a half of those responding 'the same'.
The Purchasing Managers' Index™ (PMI™) is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers' Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction.
Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease. Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.
About Emirates NBD
Emirates NBD is a leading banking Group in the region. As at 31st December 2015, total assets were AED 406.6 Billion, (equivalent to approx. USD 110.7 Billion). The Group has a leading retail banking franchise in the UAE, with more than 220 branches and over 940 ATMs and CDMs in the UAE and overseas. It is a major player in the UAE corporate and retail banking arena and has strong Islamic banking, Global Markets & Treasury, Investment Banking, Private Banking, Asset Management and Brokerage operations.
The Group has operations in the UAE, Egypt, the Kingdom of Saudi Arabia, Singapore, the United Kingdom and representative offices in India, China and Indonesia.
The Group is an active participant and supporter of the UAE's main development initiatives and of the various educational, environmental, cultural, charity and community welfare establishments.
About Markit
Markit is a leading global diversified provider of financial information services. We provide products that enhance transparency, reduce risk and improve operational efficiency. Our customers include banks, hedge funds, asset managers, central banks, regulators, auditors, fund administrators and insurance companies. Founded in 2003, we employ approximately 4,000 people in 11 countries. Markit shares are listed on Nasdaq under the symbol MRKT. For more information, please see www.markit.com.
The intellectual property rights to the Emirates NBD Saudi Arabia PMI™ provided herein are owned by or licensed to Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit's prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information ("data") contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. Emirates NBD use the above marks under licence. Markit is a registered trade mark of Markit Group Limited.
© Press Release 2016
