An indicator of growth in Saudi Arabia’s non-oil industries fell in June to the lowest level in six years as the biggest Arab economy loses momentum.
The Emirates NBD Purchasing Managers’ Index dropped to 56.1 from 57 in May, driven by a weak increase in new orders and slower output growth, the Dubai-based bank said in a report released Sunday. The same measure for the United Arab Emirates fell to 54.7 in June, the lowest in 22 months.
Saudi Arabia’s PMI index has dropped in four of the first six months this year as the world’s biggest oil exporter grapples with the plunge in crude prices. The kingdom is also leading a coalition bombing Shiite rebels in Yemen.
While the drop shows “slower momentum” in non-oil sector growth, “it is important to note that these sectors are still growing at a robust rate,” Khatija Haque, head of Middle East and North Africa research at Emirates NBD, wrote in the report.
The increase in Saudi Arabia’s oil production should also “further support activity in the non-oil private sector,” even with lower oil prices, Haque wrote.
In the U.A.E., Emirates NBD attributed some of the slowdown in June to the start of the Islamic holy month of Ramadan, when Muslims fast from dawn until dusk and working hours are reduced.
“It is difficult to determine whether the softening will continue,” Haque wrote.
The PMI, which is seasonally adjusted, is based on data compiled from monthly replies to questionnaires sent to executives in 400 companies in manufacturing, services, construction and other non-oil sectors. A level over 50 indicates an increase, while below 50 points to a decrease.