Riyadh – Mubasher: Saudi Arabia’s headline seasonally adjusted Purchasing Managers’ Index (PMI) declined last July for the first time in four months to signal 55.8 compared to 56.4 in June, according to IHS Markit survey.

Weaker growth in output, new orders, and employment contributed to the decrease in July compared to the previous month.

Output in the non-oil sector maintained a sharp pace of expansion in July yet slowing for the second consecutive month.

Approximately 27% of surveyed businesses reported an increase in activity that was backed by strengthening client demand and a loosening of pandemic-related measures.

Staff levels rose only fractionally last July as companies continued to signal an excess of business capacity despite higher sales.

“Employment prospects were also harmed by a drop in future output expectations to the joint-weakest for more than a year,” according to the report.

Surveyed businesses were less optimistic that activity would grow over the following year. Only 10% of companies gave a positive forecast, while around 87% forecast no-change.

“This brought overall business expectations to the joint-lowest since June 2020,” the report noted.

Economist at IHS Markit, David Owen, said: "Whilst the Saudi Arabia PMI continued to signal strong growth in the non-oil economy in July, our survey data related to business capacity highlighted that challenging economic conditions prevailed.”

He elaborated, “Firstly, employment growth slowed to only a marginal pace, suggesting that many companies still have little need for new hires in spite of a sharp rebound in new orders. Secondly, backlogs of work fell at the second-quickest pace for a year, adding further evidence that businesses have yet to reach pre-pandemic levels of capacity utilisation.”