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The non-oil private sector business conditions in Saudi Arabia stabilized in July, a survey showed on Wednesday.
The headline seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) rose to 50 in July, a five-month high, from 47 in June.
In June, the Saudi non-oil private sector witnessed another reduction in business activity due to disruptions in operations and subdued customer demand amid COVID-19.
"The July PMI scoring exactly 50.0 is a clear indication that the Saudi non-oil private sector is over the worst of the disruption caused by the pandemic, but remains some way from 'normal' business conditions. The latest figure is the highest since February but well below the long-run trend level of 57.1,” Trevor Balchin, Economics Director at IHS Markit, said.
According to the IHS Markit report, new orders provided the largest boost (+1.5 points), followed by output (+0.8 points), stocks of purchases (+0.6 points) and employment (+0.2 points). Suppliers' delivery times had a negative directional influence on the PMI.
During the month, the volume of new orders placed with the Saudi non-oil private sector companies was broadly stable, compared to the previous four months according to the report. Domestic demand was also resilient but new export orders continued to fall sharply.
"Although the 12-month outlook turned positive again, sentiment was subdued as the volume of outstanding work fell for a record sixth consecutive month,” Balchin said.
“With capacity under-utilised, firms cut jobs for the fifth month running, while average wages and salaries dropped for a record seventh successive month in an attempt to control overheads," Balchin added.
Average input prices rose only marginally, having dropped last month while purchase prices rose but at a weak rate.
The report added that the volume of inputs purchased fell further as firms reported sufficient inventories to deal with current workloads. Stocks of purchases rose for the first time in five months and at a solid pace.
(Reporting by Gerard Aoun; editing by Seban Scaria)
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