DUBAI: Saudi Arabia’s non-oil private sector growth remained steady — though unchanged — in April, but strong demand and increased business confidence did not translate into job creation, a monthly survey of companies showed on Sunday.
The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) remained unchanged month on month at 56.8 in April. A reading above 50 indicates expansion and below that contraction.
The Saudi private sector struggled last year because of fuel price hikes, the introduction of a 5 percent value-added tax and higher fees for hiring foreign workers.
But private sector growth picked up pace this year. It rose to a 13-month high in January and continued to gain momentum — though only marginally — through February and March.
“The headline PMI was unchanged at 56.8 last month. Output and new order growth remained firm, but there has been no meaningful growth in private sector employment over the last three months,” said Khatija Haque, head of MENA research at Emirates NBD.
The output sub-index rose to 61.2, the highest since December 2017, while new order growth remained strong, at 63.5, but two points below March levels.
The higher output in April was backed by stronger underlying demand and an associated rise in new business. Some 26 percent of surveyed businesses recorded an increase in output at their units, versus just 3 percent that recorded a contraction, according to the survey.
But the kingdom’s non-oil labor market was subdued, with the majority of firms keeping staffing numbers unchanged. Still, the employment sub-index rose slightly, to 50.1, from a contraction in March.
Meanwhile, growth in the UAE’s non-oil sector picked up in April at its fastest pace since December 2017 as new orders and business activity expanded, the PMI survey showed.
The index for the UAE rose to 57.6 in April from 55.7 a month earlier.
The output sub-index rose to 65.3 in April from 63.0 in March, while the new orders sub-index rose to 64.6 in April from 59.0 in the previous month.
External demand also picked up markedly as new work from Saudi Arabia and Oman in particular pushed the rate of growth in new export orders to a near four-year high, according to respondents in the survey.
“The improvement in the volume of activity and new order growth last month is encouraging,” said Haque.
“However, with firms still competing on price, there is still a reluctance to boost hiring and we haven’t seen a meaningful improvement in job growth.”
The UAE economy grew by around 1.7 percent in 2018, slower than projected despite a boost from higher oil prices, official preliminary data showed last month. The economy is projected to grow at a 3.5 percent rate in 2019, helped by strong non-oil activity, the central bank said in its quarterly report.
The employment sub-index rose to 50.5, the best number since January this year. But the survey showed approximately 96 percent of respondents left staffing levels unchanged over the month.
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