Riyadh – Mubasher: Saudi Arabia’s non-oil private sector slipped to a five-month low in July due to lower rates in output and new orders, a recent report by IHS Markit said on Monday.

The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers' Index (PMI) levelled down to 56.6 points in July, from to 57.4 points in June, due to a slower increase in output.

The pace of output growth across the non-oil private sector eased further from May’s recent peak to the weakest since February.

“Saudi Arabia’s non-oil private sector started the second half of the year growing at a healthy rate, according to the latest PMI data. However, the survey’s indicators for output, new orders and future expectations are all signalling some loss of momentum compared with the second quarter,” Phil Smith, Principal Economist at IHS Markit, commented.

Backlogs of work across the non-oil private sector remained unchanged in July, failing to rise for the first time in the past 14 months.

“This lack of pressure of capacity, combined with efforts to control costs, was reflected in only a marginal increase in employment,” the report highlighted.

Average staff costs meanwhile fell in July for the first time in nine months.

A lack of movement in purchase prices, which means that input costs overall were little-changed.

Moreover, purchasing activity across the non-oil private sector was active as firms looked to keep up with rising workloads.  

The rate of growth in buying levels in the GCC nation’s non-oil private sector eased for the second month in a row, the report added.

The index for new orders stood at 63.4 points, down from 64.9 points in June, and at its lowest since January.

Firms that reported higher business activity often linked this to a sustained upturn in new orders, as the pace of growth eased to the weakest since January, through was still broadly in line with the long-run series average.

“Amid a competitive environment for new work, which continues to restrict firms’ pricing power and encourage cost efficiency, extra staff recruitment was kept to a bare minimum,” Smith added.

Businesses reported lower optimism towards the future output.

“The one area where the survey did point to some improvement was exports, which continue to show signs of recovery following an underwhelming couple of years," Smith said.