Despite the loss of momentum, growth of Saudi Arabia's non-oil private sector remained firmly in expansionary territory overall, a survey, sponsored by Emirates NBD and produced by Markit, revealed Tuesday. The survey forecast record low at the start of Q4, with output, new orders and employment all rising at weaker rates. Data for prices provided a further cautionary note, however, as purchasing costs increased at the sharpest pace since July 2014. Charges rose only marginally, with competitive pressures preventing higher costs from being passed immediately onto clients. Commenting on the Emirates NBD Saudi Arabia PMITM, Khatija Haque, Head of MENA Research at Emirates NBD, said, "the October PMI data points to a slower rate of growth in the non-oil private sector as we head into the fourth quarter, which is unsurprising in the context of sharply lower oil revenues and tighter liquidity conditions. However, the rate of expansion in the non-oil sector is still relatively robust, and overall GDP growth will also be underpinned by higher oil production this year." 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 – dropped for the second straight month to 55.7, from 56.5 in September. The October reading was the lowest in the survey's history, and highlighted a further loss of growth momentum from the five-month high seen midway through Q3 (58.7). Nonetheless, it still pointed to a solid improvement in business conditions overall. Non-oil private sector output in Saudi Arabia rose more slowly during October. The respective index held up better than that for new business, however, and signaled a marked rise that was only slightly weaker than in September. For the nineteenth month in a row, job creation was evident in Saudi Arabia's non-oil private sector. That said, the rate of hiring eased to a three-month low. Meanwhile, backlogs of work were accumulated at the weakest pace since mid-2014. Similarly, the rate of expansion in purchasing activity eased to a near-one year low during October. Nonetheless, it was marked overall and led to another solid rise in pre-production inventories held by Saudi Arabia's non-oil private sector firms. On the price front, total cost pressures intensified in October. The overall rise was underpinned by the sharpest increase in purchase prices since July 2014, which was attributed in turn to stronger demand for inputs. In contrast, output charges rose only fractionally, amid reports that greater competition had limited inflationary pressure from rising raw material costs.
