The rate of inflation picked up slightly and remained close to September’s series low, according to the survey

Growth of Saudi Arabia’s non-oil private sector slowed considerably in October, with business conditions improving at the weakest pace in the series history, according to a survey. The survey, sponsored by Emirates NBD and produced by IHS Markit, contains original data collected from a monthly survey of business conditions in the Saudi private sector.
Both output and new orders rose more slowly, while jobs growth neared stagnation. The rate of expansion in purchasing activity held up slightly better, as firms acted on forecasts of stronger sales growth, the survey stated. 
Those projections may have been linked to an expected upturn in demand following price discounting. Charges fell for the second successive month amid muted cost pressures. 
Commenting on the Emirates NBD Saudi Arabia PMITM, Khatija Haque, head of MENA Research at Emirates NBD, said: “The decline in the Purchasing Managers’ Index in October was not unexpected, given the additional fiscal measures that came into effect last month including public sector wage cuts. External demand also softened further last month.” 
Khatija Haque added: “However, the PMI reading remains well above the neutral 50.0 level, indicating growth in the non-oil sector, albeit at a slower rate than last 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 to a survey-record low of 53.2 in October, from 55.3 in September. 
That marked a second successive slowdown in growth following August’s 12-month high (56.6), and meant that the average index reading of 2016 to date (54.7) remained much lower than the long-run trend (58.4).
The slowdown in growth of the sector as a whole was partly reflective of weaker expansions in output and new business. Both rose to the least extent since the survey began in August 2009. That said, the respective rises were still marked, with firms commenting on improved sales as a result of marketing initiatives and discounts. 
New export orders also increased, albeit only slightly.
Growth of purchasing activity eased to a four-month low in October, but remained faster than that seen for output and new work. 
Panellists indicated that strong sales projections had been behind the expansion. In line with this, pre-production inventories increased further.
On the jobs front, the rate of hiring moderated to a six-month low. 
The vast majority of surveyed companies (97 percent) reported no change since September. 
Those firms that took on extra staff did so in an effort to expand operating capacity. Backlogs of work were broadly unchanged in the latest period, after having risen back-to-back in August and September.
Meanwhile, total input costs in Saudi Arabia’s non-oil private sector continued to rise at the start of the fourth quarter. That said, the rate of inflation picked up only slightly and remained close to September’s series low. 
The rises in salaries and purchase costs were relatively modest, with the latter reversing a fall in the prior month but still being the least marked increase on record.
With demand slowing and cost pressures remaining subdued, companies reduced their charges on average in October. Though only marginal, the decline was the second in as many months. Strong competition was also a factor behind the fall, according to panellists.

 

Source: Arab News