- U.A.E. October PMI drops to lowest level since April 2013
- Levels above 50 still in `firmly in expansion territory'
A measure of growth in Saudi Arabia’s non-oil private industries dropped to the lowest level in six years in October as the slump in oil prices slowed the biggest Arab economy’s momentum.
The Emirates NBD Purchasing Managers’ Index fell to 55.7 from 56.5 in September, the lowest level since the survey began, driven by weaker expansion in new business. The same measure for the United Arab Emirates fell to 54 from 56 in September, the lowest since April 2013, the Dubai-based bank said on Tuesday. Readings above 50 signal expansion, while those below indicate contraction.
Brent crude prices have dropped more than 40 percent over the past year, leading Saudi Arabia to search for budget savings, contemplate project delays and sell bonds for the first time since 2007. The country relies on oil for at least 80 percent of its revenue.
The slower growth in the kingdom’s private sector last month is "unsurprising in the context of sharply lower oil revenues and tighter liquidity conditions," Khatija Haque, head of Middle East and North Africa research at Emirates NBD, wrote. "However, the rate of expansion in the non-oil sector is still relatively robust."
While rates of growth in output, new orders and employment all eased, "the sector remained firmly in expansion territory overall," according to the report.
The drop in the U.A.E. showed "slower, but still solid, improvement in business conditions," with firms raising their output but cautious about purchasing, the report said.
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.