Riyadh – Mubasher: Saudi Arabia’s non-oil private sector continued its growth momentum in February, with business conditions improving at the quickest rate since August 2015, according to the Emirates NBD Purchasing Managers' Index (PMI) report for the Kingdom.

The report released on Sunday said that both output and new orders “rose sharply” last month, “with the rate of expansion in the latter picking up to an 18-month high”.

Accordingly and due to projections of further improvements in market demand in the coming months, companies raised their input buying at a strong pace to accommodate higher output.

Despite the “robust upturn” in new work, the rate of job creation in Saudi Arabia remained low, the report, sponsored by Emirates NBD and produced by IHS Markit, showed, noting that ongoing cost pressures prompted firms to raise their output charges for the fourth month in a row.

Saudi Arabia’s PMI rose to 57.0 in February from 56.7 in January, the report said, adding that “the headline seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index™ (PMI) – a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy – was consistent with a marked improvement in operating conditions during February”.

January’s reading was also seen as the highest in one-and-a-half years. Still, it remained slightly below the long-run series average of 58.3.

The overall improvement in the sector was bolstered by sharper growth of new work during February.

“Anecdotal evidence highlighted that promotional activities, new projects, construction activity, and stronger underlying demand had supported the upturn in new work. Higher new export orders also contributed to the growth of total new business. The latest increase in new work from abroad was the most marked in six months,” the survey showed.

Purchasing activity also increased notably in February, with “stocks of purchases” continuing to rise at a solid pace.

Meanwhile, the rate of job creation “eased to a 14-month low and was slight overall”. The survey recorded marginal employment growth in each of the past six months, resulting in backlogs of work being accumulated at the fastest rate in 20 months.

Commenting on the Emirates NBD Saudi Arabia PMI, Khatija Haque, head of MENA research at Emirates NBD, stated: “Faster output and new orders were the main driver behind the higher PMI reading in February, signalling faster growth in the non-oil private sector last month. However, this has yet to translate into increased employment in the sector. Nevertheless, firms appear to be relatively optimistic about prospects for the coming year.”