DUBAI (Reuters) - Growth of Saudi Arabia’s non-oil private sector slowed slightly in December but remained high compared to levels seen in the past two years, a corporate survey showed on Thursday.
The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers’ Index edged down to 57.3 last month from a two-year high of 57.5 in November. A level above 50 means business is expanding.
Budget data released by the government in mid-December showed that after more than two years of austerity, state spending jumped in the fourth quarter of 2017 as authorities sought to strengthen weak economic growth.
Spending in the fourth quarter was about 354 billion riyals ($94 billion), by far the largest amount in any quarter of 2017 and accounting for 38 percent of all state spending for the entire year. Much of the government money eventually flowed into the private sector, boosting activity.
“The December PMI survey continued to show a strong rate of expansion in December, and the data suggests that non-oil growth accelerated in the final quarter of 2017, as well as for the year as a whole compared to 2016,” said Khatija Haque, head of regional research at Emirates NBD.
“Nevertheless, we expect headline GDP growth to be close to zero in 2017 as substantial oil production cuts will offset the expansion in the non-oil sectors of the economy. We are more optimistic about growth prospects in 2018, however.”
Output growth slowed to 62.8 in December from 64.3 in November, while growth in new orders eased to 63.2. Employment growth sped up slightly to 50.9, however.
Output prices resumed rising very gradually in December after staying flat in November, while input price inflation rose to 54.3 from 52.8.
Reporting by Andrew Torchia; Editing by Hugh Lawson