Saudi non-oil private sector employment hits 18-month high in September: PMI

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Saudi Arabia’s non-oil sector growth remained stable in the third quarter of 2019, supported by domestic demand, which was underpinned by government spending, a corporate survey showed on Thursday.

The seasonally adjusted Emirates NBD UAE Purchasing Managers’ Index, which covers manufacturing and services, rose to 57.3 in September and the average for Q3 was 57.0, similar to the second quarter reading of 57.2.

Data showed that non-oil private sector employment reached an 18-month high in September, as some survey panelists said they raised their headcount to boost the quality of their products and services.

“At current levels, the PMI survey is consistent with year-on-year GDP growth of around 3 percent, as we head into the final quarter of 2019,” said Amritpal Virdee, Economist at global information provider IHS Markit.

Growth in Saudi Arabia picked up in 2019 as the government introduced a five percent value-added tax (VAT) and increased fuel prices.

In Q2 2019, Saudi Arabia’s non-oil GDP grew by 2.9 percent year-on-year, the highest level since 2015.

Fitch on Monday, however, downgraded Saudi Arabia’s credit rating to A from A+, citing economics risks arising from geopolitical and military tensions in the Arabian Gulf after the September 14 attacks on Saudi Aramco’s key oil facilities.

The ratings agency also flagged concerns regarding the Kingdom’s balance sheet.

“October data will provide the first opportunity to gauge the impact of the recent attacks on the critical oil processing facilities in Abaqaiq and Khurais on the wider economy,” Virdee from IHS Markit 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.

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