Saudi Arabia's non-oil private sector continued to grow in September, driven by strong gains in output and new orders, though at a slower pace than in August as confidence softened. Egypt, however, suffered a contraction in its non-oil private sector activity at the end of the third quarter, surveys showed Tuesday.
Saudi sector
The seasonally adjusted S&P Global Saudi Arabia Purchasing Managers' Index (PMI), a set of economic indicators consisting of several sub-indices, recorded 56.6 in September, which is above the 50 mark denoting growth, but below August's record of 57.7, signaling a slower rate of expansion.
The output sub-index, which measures business activity, dipped to 59.5 in September from 61.5 in August, down for the third consecutive month, though growth expectations for the next 12 months remain positive as sales continue to be strong. Also, the employment sub-index grew the slightest since January.
David Owen, an economist at S&P Global Market Intelligence, said that output and new orders rose "at rates above their averages for their current 25-month growth sequences," adding that inflationary pressures are currently contained due to costs rising at a "broadly average rate" and non-oil companies keen to maintain competitive pricing policies. "Albeit down on August, Saudi Arabia's non-oil private sector economy retained an impressive pace of growth during September, especially against the backdrop of increasingly challenging global economic conditions," Owen said
S&P Global Egypt PMI was at 47.6 in September, below the 50 neutral value, indicating contraction. The output sub-index dipped to 45.4 from 45.8 the previous month and the subindex for new orders edged up to 45.9 from 45.1.
Inflationary pressures and unfavorable exchange rate movements drove overall input prices to a three-month high, prompting firms to hike their selling prices. On the other side, purchasing activity of non-oil firms shrank following sustained declines in demand and growing cost burdens, leading to inventory holdings down for the fourteenth month in a row.
Egypt PMI's sub-index for overall input prices deteriorated to 64.6 from 58.8 in August, while that for purchase costs slumped to 64.5 from 60.8.
The outlook for future activity in the sector improved from August's near-survey low, with the sub-index for future output expectations rising marginally to 55.7 from 53.5, but near a 10-year low of 52.5 recorded in March.
"Non-oil activity in Egypt continued to suffer from weak demand, geopolitical tensions and surging inflation in the final month of the third quarter. The energy crisis - brought about by Russia's war on Ukraine - led to sharp uplifts in energy costs and the introduction of energy rationing policies. At the same time, unfavourable pounddollar exchange rate movements added to already steep price pressures," said Shreeya Patel, Economist at S&P Global Market Intelligence.
