Wednesday, September 22, 2021

Saudi Non-Oil Economy Grows at Slower Pace Amid Lower Exports

(Bloomberg) — Business activity in Saudi Arabia last month grew at the weakest pace in 10 months as lower export demand weighed on the kingdom’s non-oil economy. 

A Purchasing Managers’ Index compiled by IHS Markit fell to 54.1 in August from 55.8 in the previous month, remaining above 50, the mark that separates growth from contraction. The survey showed employment growth remained negligible while stocks of purchases rose at the slowest pace since October. 

“The non-oil economy went slightly off the boil in August, as output growth slipped to the weakest level for 10 months amid a slowdown in new business gains,” wrote David Owen, economist at IHS Markit. “Whilst domestic orders remained strong and firms saw an upturn in tourist numbers, many businesses continued to find market conditions challenging amid the pandemic.”

Owen also wrote:

  • “Demand momentum is still largely on the upside, with nearly three times as many firms seeing a rise in new orders as those registering a fall.”
  • “Job creation disappointed again in August, due to a further fall in backlog volumes and a subdued outlook for future activity. Whilst firms expect an improvement in domestic business conditions in the coming months, the unpredictability of the pandemic meant that downside risks remained high.”

In neighboring United Arab Emirates, business activity grew at the fastest pace since late 2019 amid a sharp increase in new work. 

The UAE’s PMI survey was at 53.8 in August compared to 54 in July. Business confidence slipped again in August to the lowest in five months, but the outlook remained positive as companies hoped the Expo 2020 event would bring in investments. 

(Updates chart, UAE PMI.)

©2021 Bloomberg L.P.

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