Monday’s survey showed that the non-oil private sector in Saudi Arabia returned to growth in September for the first time in seven months, amid an increase in demand after easing the general isolation measures imposed to limit the spread of the Corona virus.
The IHS Markit seasonally adjusted Purchasing Managers’ Index for Saudi Arabia rose to 50.7 from 48.8 in August, breaking the 50 barrier separating growth and contraction for the first time since February before the pandemic began.
“Business activity in the non-oil private sector increased in Saudi Arabia in September, supported by sales returning to growth, as the economy began to adjust its course after the shutdown caused by Covid-19,” said David Owen, an economist at IHS Markit.
In addition, the impact of a rise in value tax has receded significantly after August saw a significant increase in prices and a decrease in sales. Cost inflation has fallen to a marginal pace.
Saudi Arabia, the world’s largest oil exporter, tripled its value-added tax in July to 15% in an effort to support state coffers hard hit by falling oil prices and cuts in crude production, a move economists said is likely to slow the economic recovery from the decline. caused by the pandemic.
Business conditions deteriorated in August, in part due to the impact of the value-added tax on consumer spending and the costs of business inputs.
The survey said the increase in input costs in September was much lower, with the impact of the tax waning significantly. However, labor markets remained subdued, with employment activity declining for the eighth consecutive month.
Saudi Arabia said last week that unemployment among Saudi nationals rose to an unprecedented level of 15.4% in the second quarter of the year, while the economy shrank 7%.
Owen said that the Saudi economy still has some way to move towards a full recovery, production growth is still well below its normal level and jobs are still declining, albeit at a slower pace. Companies will need a steady increase in sales that supports a strong end to the year. (Reuters)