Saudi Arabia’s non-oil private sector little changed in October – PMI

Above, the King Abdullah Financial District north of Riyadh. which will accelerate to 2.5 percent in 2018. (Reuters)

DUBAI: Saudi Arabia’s non-oil private sector was almost at a standstill in October, but business optimism was at the highest level in almost half a year, a key economic gauge showed on Sunday.
The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index edged up to 55.6 last month from 55.5 in September. A level above 50 means business is expanding.
Business optimism however rose sharply in October, with this component of the survey reaching the highest level since May. Firms also increased their purchasing activity at the fastest rate in six months, while the rise in pre-production inventories was the strongest in the series history, as businesses anticipated stronger demand in the coming weeks.
“While non-oil growth in H1 2017 was a little softer than we had expected, the PMI survey data so far in H2 suggests that business conditions have continued to improve and firms are expecting increased activity in the coming months,” Khatija Haque, head of regional research at Emirates NBD, said.
The Saudi Arabian government is undertaking a major reform push under its Vision 2030 plan, which is aimed at diversifying the oil-dependent economy. Last month, the country’s sovereign fund Public Investment Fund launched the Future Investment Initiative – also known as Davos in the Desert – to explore investment trends and opportunities for the Kingdom as a business destination.
One of the highlights of the Riyadh event was the unveiling of Neom, a futuristic city that stretches across the borders of northwest Saudi Arabia into Jordan and Egypt, that is envisioned to operate as an independent economic trade zone with its own laws.
Saudi Arabia has committed $500 billion for Neom, which will be invested in key sectors including energy and water, mobility, biotechnology, digital sciences and advanced manufacturing.
“We expect that sentiment will continue to be underpinned by the announcement of new economic reforms and initiatives (including the recent announcement of the construction of a new city, Neom, which came after the October survey was conducted),” Haque said.
Emirates NBD is also maintaining its 0.5 percent GDP growth forecast for this year, which will accelerate to 2.5 percent in 2018.