Saudi Arabia's non-oil private sector grew at its fastest pace for 18 months in February as new orders of goods and services increased sharply, although employment growth slowed, a survey of companies showed on Sunday. The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers' Index rose to 57.0 last month from 56.7 in January. A level above 50 means business is expanding.
"Firms appear to be relatively optimistic about prospects for the coming year," said Khatija Haque, head of regional research at Emirates NBD, though she noted that companies were still not creating substantial numbers of new jobs.
Low oil prices shrank the government's export revenues and caused it to freeze many of its payments of debt to the private sector for most of last year.
But a partial rebound of oil prices late last year, and the success of a $17.5 billion sovereign bond issue, eased pressure on state finances, encouraging the government to resume paying its bills and slow the introduction of new austerity steps. This has buoyed the private sector.
Growth in output slowed to 63.8 in February from 64.3 in January, but growth in new orders accelerated to 62.8 from 60.7.
Employment growth fell to a 14-month low of 50.3, showing companies remain cautious about expanding their workforces because of an outlook for rising costs. Visa fees for foreign workers and their dependants will increase in coming months and years, while the government plans to introduce a 5 percent value-added tax next year.
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