Saudi non-oil businesses improve in October; job losses continue - IHS Markit

Non-oil private sector continues to show signs of improvement, but outlook remains weak

Streets in illuminated cityscape, Riyadh, Saudi Arabia.

Streets in illuminated cityscape, Riyadh, Saudi Arabia.

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Business conditions in Saudi Arabia’s non-oil private sector improved further in October, but employment levels continued to fall, new research showed on Tuesday.

The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) rose slightly to 51 in October, from 50.7 in September, the highest reading seen for eight months and signalling a back-to-back improvement in business conditions.

David Owen, economist at IHS Markit, said the latest PMI indicated a further improvement in the non-oil private sector in October, however, there are reasons for fresh concerns about the pace of recovery from the pandemic.

He noted that employment opportunities continued to fall, with the rate of decline accelerating for the first time since June, while sales growth slowed to just a marginal pace during the month, after a renewed upturn in September.

“Firms indicated that financial issues at some clients and a slow resumption of projects have curbed the economic rebound since restrictions eased. Many businesses are hopeful that growth will strengthen in the coming 12 months, but there remains a high number of firms uncertain that markets can be fully revived with COVID-19 infections still prevalent around the world,” Owen said.

According to IHS Markit, the latest upturn in Saudi Arabia’s PMI was supported by a stronger rise in output across the non-oil private sector, with growth accelerating to the quickest since February.

However, in contrast to the improving output trend, the overall rate of demand growth softened to just a marginal place in October.

Last September, Saudi Arabia’s non-oil private sector returned to growth for the first time since the loosening of COVID-19 precautionary measures.

The kingdom closed its borders to international travel in March, in a bid to curb the spread of coronavirus. The restrictions were partially lifted only on September 15, allowing passengers under “exceptional categories” to fly out of the country. All the travel restrictions will be removed only on January 1, 2021.

(Reporting by Cleofe Maceda; editing by Seban Scaria)

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