DUBAI – Saudi Arabia’s non-oil private sector gained momentum in November but this did not translate into a higher rate of job creation, a survey showed on Tuesday.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) rose to 58.3 in November, up from 57.8 in October and the highest in over four years. Any reading above 50 indicates expansion.
The increase in the headline figure was underpinned by an uptick in new order growth, with around 45% of the surveyed businesses recording a rise in order books.
Output growth declined to the slowest in four months, however, and job creation remained subdued.
The November survey data “point to a faster rate of non-oil GDP expansion for the fourth quarter of 2019,” said Amritpal Virdee, Economist at IHS Markit.
“Stronger demand conditions helped outweigh continued weakness in job creation and slower output growth,” he said.
Growth in the non-oil private sector is crucial for Crown Prince Mohammed bin Salman’s plans to diversify the Saudi economy and create jobs.
The Gulf state, the world’s largest oil exporter, is facing a budget deficit of around $35 billion this year and $50 billion next year, as it copes with low crude prices and OPEC-led production cuts.
Riyadh expects the economy to grow 0.9% this year and 2.3% next year, as the government plans to boost non-oil sectors such as tourism, logistics and financial services.
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(Reporting by Davide Barbuscia; Editing by Catherine Evans) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: email@example.com))