Riyadh: Today sees the release of June data from the Emirates NBD Purchasing Managers’ Index® (PMI®) for Saudi Arabia. The survey, sponsored by Emirates NBD and produced by IHS Markit, contains original data collected from a monthly survey of business conditions in the Saudi Arabian private sector.

Commenting on the Saudi Arabia PMI® survey, Khatija Haque, Head of MENA Research at Emirates NBD, said:

“The headline Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) eased marginally to 54.9 in July from 55.0 in June. Although the index has rebounded over the last couple of months, year-to-date the headline PMI averaged 53.4, well below the 56.0 average for the same period last year, which indicates a much slower rate of growth in the Kingdom’s non-oil private sector so far this year.

The PMI survey showed both output and new orders increased sharply last month, although at a slightly slower rate than in June. However, once again the year-to-date average for both series indicate much softer growth than for the same period in 2017. Employment increased modestly in July, as did new export orders. There is very little evidence of wage growth in Saudi Arabia’s private sector, with the staff costs index at 50.3 in July, similar to the prior two months.

While input costs continued to rise in July, the rate of increase was slower than in July. The vast majority of firms kept selling prices unchanged last month, although the output price index was fractionally below the neutral 50.0 level. The backlogs of work increased sharply in July, with some firms attributing this to delays in ongoing projects.

Firms saw inventories rise at the fastest rate this year in July, which may indicate some optimism about improving demand in the near term. More than 18% of respondents expected their output to be higher in 12 months’ time, down from more than 40% earlier in the year. Given the sharp rise in actual output and new orders in June and July, it is reasonable for expectations to be more modest going forward.”  

The main findings of the July survey were as follows:

  • Headline PMI eases fractionally to 54.9 in July, from 55.0 in June
  • Output and new order growth remains marked
  • Backlogs of work rise at sharp pace

At 54.9 in July, down from 55.0 in June, 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 – remained in positive territory and thus indicated a solid improvement in business conditions. The figure remained broadly in line with the two-year trend, and above the average seen since the VAT introduction at the beginning of the year.

Non-oil private sector firms in Saudi Arabia continued to report marked growth of output in the latest survey period, although the rate of expansion cooled fractionally since June. Survey respondents linked higher activity to solid inflows of new business.

Despite marked growth of output, businesses reported the third-sharpest build-up in backlogs of work in the survey’s history in July. Some firms noted delays in ongoing projects, leading to an increase in work outstanding.

Total new order growth remained marked in July. The expansion extended the current phase of growth to three months. Furthermore, foreign demand continued to improve. Some firms noted an increase in orders from neighbouring GCC countries.

Despite a continuation of robust business conditions and rising backlogs of work, job creation in the non-oil private sector remained historically subdued. July’s increase in employment was only slight overall, matching that registered in June.

The latest data indicated a softer increase in average cost burdens in July. Reflecting easing input price pressures, some firms sought to increase client demand by offering price discounts. That said, output charges only fell fractionally overall.

Business confidence in the non-oil private sector remained subdued in the context of 2018 so far during July. Nonetheless, the degree of optimism remained strong overall and improved since June. Marketing initiatives, new product launches and an expected economic upturn underpinned positive sentiment in the latest survey.

-Ends-

The next Saudi Arabia PMI Report will be published on September 4th 2018 at 07:15 (RIYADH) / 04:15 (UTC)

For further information, please contact:

Ibrahim Sowaidan

Senior Vice-President, Head - Group Corporate Affairs

Emirates NBD

Telephone: +971 4 609 4113 / +971 50 6538937

Email: ibrahims@emiratesnbd.com

Tricia Kaul                                                                           Khatija Haque

ASDA’A Burson-Marsteller; Dubai, UAE                                 Head of MENA Research, Emirates NBD

Tel: +971 56 6032673                                                            Email: KhatijaH@emiratesnbd.com

Email: tricia.kaul@bm.com

Joanna Vickers                                                                       Sam Teague

Corporate Communications                                                      Economist

IHS Markit                                                                                IHS Markit

Tel: +44-207-260-2234                                                             Tel: +44 1491 4610018

Email: joanna.vickers@ihsmarkit.com                                       Email: sam.teague@ihsmarkit.com

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. IHS 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 30th June 2018, total assets were AED 477.5 Billion, (equivalent to approx. USD 130 Billion). The Group has a significant retail banking franchise in the UAE and is a key participant in the global digital banking industry, with over 90 per cent of all financial transactions and requests conducted outside of its branches. The bank was declared the Most Innovative Financial Services Organization of the Year at the 2017 BAI Global Innovation Awards.

The bank currently has 227 branches and 1065 ATMs and SDMs in the UAE and overseas and a large social media following, being the only bank in the Middle East ranked among the top 20 in the ‘Power 100 Social Media Rankings’, compiled by The Financial Brand. 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, the Kingdom of Saudi Arabia, Egypt, India, Singapore, the United Kingdom and representative offices in China and Indonesia.

The Group is an active participant and supporter of the UAE’s main development and community initiatives, in close alignment with the UAE government’s strategies, including financial literacy and advocacy for inclusion of People with Disabilities under its #TogetherLimitless platform. Emirates NBD Group is an Official Premier Partner of Expo 2020 Dubai. For more information, please visit: www.emiratesnbd.com: www.emiratesnbd.com

About IHS Markit (www.ihsmarkit.com)

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. 

IHS Markit is a registered trademark of IHS Markit Ltd and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2018 IHS Markit Ltd. All rights reserved.

The intellectual property rights to the Emirates NBD Saudi Arabia PMI® provided herein are owned by or licensed to IHS Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit’s prior consent. IHS 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 IHS 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. IHS Markit is a registered trade mark of IHS Markit Limited and/or its affiliates.

© Press Release 2018

Disclaimer: The contents of this press release was provided from an external third party provider. This website is not responsible for, and does not control, such external content. This content is provided on an “as is” and “as available” basis and has not been edited in any way. Neither this website nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this press release.

The press release is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Neither this website nor our affiliates shall be liable for any errors or inaccuracies in the content, or for any actions taken by you in reliance thereon. You expressly agree that your use of the information within this article is at your sole risk.

To the fullest extent permitted by applicable law, this website, its parent company, its subsidiaries, its affiliates and the respective shareholders, directors, officers, employees, agents, advertisers, content providers and licensors will not be liable (jointly or severally) to you for any direct, indirect, consequential, special, incidental, punitive or exemplary damages, including without limitation, lost profits, lost savings and lost revenues, whether in negligence, tort, contract or any other theory of liability, even if the parties have been advised of the possibility or could have foreseen any such damages.