Saudi Arabia’s non-oil private sector remains confident in 2020 outlook: PMI
Data for Saudi Arabia’s non-oil private sector in January indicated that firms remain confident in the business outlook for 2020, although this level dropped compared to December data.
Business conditions improved in the Kingdom’s non-oil private sector as the country reported a positive result in the IHS Markit Saudi Arabia Purchasing Managers’ Index for January 2020. However, the rate of expansion slowed to the lowest level for 13 months. The seasonally adjusted index fell to 54.9 in January, remaining above the 50.0 mark, but down from December’s 56.9.
“January data suggested that non-oil private sector companies remained in expansion mode,” said Tim Moore, economics associate director at IHS Markit. “However, business activity was again constrained by a slowdown in new order growth. The latest rise in sales volumes was the softest recorded for 13 months.”
Survey respondents noted that this slowdown in growth was mostly a result of strong competition and cautious spending by customers, the report said. Export sales also reportedly dipped across the sector as international markets moderated.
Firms also reported a lack of pressure on business capacity amid a softer growth in new orders overall. This dynamic was reflected in a slowdown in employment numbers, with job creation growth rising at its slowest level since August 2019.
“Non-oil firms in Saudi Arabia are optimistic about the business outlook for 2020, but levels of confidence have dropped since December, which acted as a brake on staff hiring and input buying at the start of the year,” Moore added.