Saudi Arabia’s non-oil private sector growth kicked off the fourth quarter of 2019 on a strong note, as the business climate in October improved at its fastest rate in four years, a corporate survey showed on Thursday.
The country’s seasonally adjusted Purchasing Managers’ Index (PMI) – used to gauge operating conditions in the non-oil economy – rose to 57.8 from 57.3 in September, its highest since August 2015, signaling a sustained improvement in growth momentum, IHS Markit said in a note on Thursday.
“At current levels, the PMI is indicative of gross domestic product (GDP) expanding at an annual rate of around 4 percent, which would be a notable acceleration in growth from the start of 2019,” said Amritpal Virdee, Economist at IHS Markit.
Output and new order growth fast-tracked in October, with the latter growing at its fastest rate since June. Meanwhile, average selling prices fell for the second time in the past five months, as businesses aimed to encourage higher customer orders.
Export conditions in the Kingdom also became more supportive, with panelists in the survey saying they had witnessed an overall improvement in foreign demand conditions, Virdee said.
Data showed that export sales also rose, but at a slower pace, signaling that core growth continued to come from the domestic market.
Meanwhile, purchasing activity in October saw a sharp increase, as firms sought to bring their buying levels into line with higher output requirements and raise their inventories, IHS found in the survey.
“Businesses that raised their stocks of purchases also commented on an expected uplift in activity in the coming month,” the survey said.
On another note, employment in the non-oil economy only rose modestly and at a slower pace than it did in September, as firms were hesitant to take on additional employees.
“According to anecdotal evidence, extra staff were recruited in order to fulfil company expansion plans,” IHS added.
PMI readings vary between 0 and 100, with a reading above 50 indicating an increase compared to the previous month, and below 50 an overall decrease.