Saudi July non-oil business growth recovers from record low – PMI

Growth in Saudi Arabia’s non-oil private sector rose in July after hitting a record low in June, a survey of businesses showed on Tuesday.

The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index climbed to 57.7 points last month from 56.1 in June, which was its lowest level since the survey was launched in August 2009. The 50-point level separates expansion from contraction.

“The latest PMI survey is encouraging and suggests that the slight slowdown we’ve been seeing in the region’s largest economy since March is now over,” said Jean-Paul Pigat, senior economist at Emirates NBD.

“Despite global oil prices remaining low, the pace of expansion in Saudi Arabia’s non-oil economy still appears robust, and coupled with rising oil output, will prove supportive to headline GDP growth in H2.”

June’s slowdown had appeared partly due to the onset of the Muslim fasting month of Ramadan, which began on June 18, as well as to the fading of a one-off fiscal stimulus in the first quarter, when the government gave a bonus worth two months of salary to state employees to mark the accession of King Salman.

In July, the output subindex rose sharply to a four-month high of 65.1 points from 62.1 in June, while the new orders subindex accelerated even faster to 63.1 from 59.8.

The output price subindex edged up to 51.0 points in July while the input price subindex increased by a larger margin, to 53.9 points.