Non-oil activity grows at a slower rate in April as new orders slow down

Non-oil business activity in the Kingdom grew at its slowest rate in eight months in April, in a slowdown that was primarily driven by a drop in new order growth, according to the Riyad Bank Saudi Arabia PMI (pdf). The seasonally adjusted headline figure came in at 55.6 in April, dipping from a reading of 58.1 in March.

The new orders subindex fell to 58.6 in April, down from 63.2 in March, marking the third consecutive month of decline for the Kingdom, according to Reuters. The rate of growth in new orders slowed to an eight-month low, driven by a combination of global economic uncertainty, which impacted client spending, and rising competitive pressures.

“The deceleration was largely driven by weaker demand growth and a significant easing in new order inflows amid a more challenging global environment,” National Bank of Kuwait's Issa Hijazeen told EnterpriseAM.

MEANWHILE- Hiring growth accelerated to its fastest pace since October 2014. “This surge in employment is a response to rising sales and increased business activity, prompting firms to expand staffing capacities,” Riyad Bank Chief Economist Naif Al Ghaith said. “Private sector firms expanded their workforce at the joint-fastest rate in over a decade, underlining confidence in long-term business prospects,” Hijazeen said.

Firms’ purchasing activity saw a steep increase, this time growing at a three-month high as companies looked to lock in high volumes of inputs in stock over anticipation of a rise in demand and activity over the near future, according to the report. This, in turn, caused additional pressures on input prices, with input cost inflation rebounding from March’s 43-month low. Output prices also rose as a result, albeit at a modest rate, with higher operating costs cited as the primary reason for increased prices.

“Business activity among non-oil companies has soared at the outset of the second quarter, driven by higher sales, new project approvals, and strong tourist numbers. While output growth remains robust, it is somewhat tempered by global economic uncertainties and competitive pressures affecting client spending,” Al Ghaith said.