PMI slips to three-month low in April
Riyadh - Growth of Saudi Arabia's non-oil private sector stalled in April, with business conditions improving at the slowest pace in three months. Output continued to rise sharply, but the rate of job creation eased to near-stagnation. New business increased to the least extent in the survey's history, weighed down by a first drop in exports since data collection started in 2009. On the price front, charges nearly stabilised as rises stemming from higher input costs offset cuts generated by increased competition.
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.
"Saudi Arabia's PMI has been broadly stable around 54 since the start of this year, signalling steady growth in the non-oil private sector. Both new orders and output continue to rise at a robust rate, despite weaker external demand. Firms were more cautious with hiring in April, with jobs growth at a four-month low."
Key Findings
- Business conditions improve at weaker pace
- Falling exports contribute to slowdown in growth of total new work
- Sharp expansion of output, but employment barely rises
At 54.2, 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 - was consistent with a solid improvement in business conditions in April. That said, the latest reading suggested that growth of the non-oil private sector as a whole remained at a relatively low ebb. It was down slightly from 54.5 in March, and only just above the survey-record low seen in January (53.9).
In line with the overall trend, growth of new orders slowed in April. The increase was the least marked in the series history, albeit still solid overall. Whereas some panellists continued to mention improving client demand and better marketing as factors behind higher new work, others suggested that they had lost out due to greater competition. Lower exports also undermined total new business - the fall in new work from abroad was a survey-first.
The relatively subdued rise in new orders barely motivated firms to add to their staffing levels in April. Employment rose only slightly, with the vast majority of respondents seeing no change since March. Backlogs of work increased further, but at the slowest pace in the current 39-month sequence of growth. Some companies said that they had become more efficient in production.
Output remained a bright spot in April. Though below the long-run average, the latest expansion was sharp and the second-strongest in five months. According to anecdotal evidence, higher activity was a result of projects that were either new or ongoing.
Meanwhile, purchasing activity at Saudi Arabia's non-oil private sector businesses continued to rise, extending the current upturn which has run throughout the survey's history. The rate of growth eased, however, and was among the weakest on record. As a result, input stocks rose only modestly.
Total cost pressures remained muted in the context of historical data in April. Despite picking up slightly since March, the rate of inflation was only modest, dampened by a first drop in salaries since the series began in August 2009. Nonetheless, the rise in overall input prices reportedly had an impact on firms' charges. After five successive months of decline, tariffs broadly stabilised as higher costs offset competitive pressures.
-Ends-
The next Saudi Arabia PMI Report will be published on June 5th 2016 at 08:30 (RIYADH) / 05:30 (UTC)
About
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 March 2016, total assets were AED 414.5 Billion, (equivalent to approx. USD 112.6 Billion). The Group has a leading retail banking franchise in the UAE, with more than 220 branches and over 960 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.
For more information, please visit: www.emiratesnbd.com
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.
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 Khatija Haque
ASDA'A Burson-Marsteller; Dubai, UAE Head of MENA Research, Emirates NBD
Tel: 971-4-4507600; Fax: 971-4-4358040 Email: KhatijaH@emiratesnbd.com
Email: tricia.kaul@bm.com
Joanna Vickers Philip Leake
Corporate Communications Economist
Markit Markit
Tel: +44-207-260-2234 Tel: +44-1491-461014
Email: joanna.vickers@markit.com Email: philip.leake@markit.com
© Press Release 2016
