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Saudi Arabia’s PMI Remains in Economic Expansion Zone

King Abdullah Financial Center in Saudi Arabia (Asharq Al-Awsat)
King Abdullah Financial Center in Saudi Arabia (Asharq Al-Awsat)
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Saudi Arabia’s PMI Remains in Economic Expansion Zone

King Abdullah Financial Center in Saudi Arabia (Asharq Al-Awsat)
King Abdullah Financial Center in Saudi Arabia (Asharq Al-Awsat)

The latest Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) showed the Kingdom's PMI stabilized at 55, as a result of another strong improvement in business activity in the non-oil-producing private sector.
The analytical readings issued by the Ministry of Economy and Planning indicate that the index stayed above the fifty-point limit, remaining in the economic expansion zone.
Riyad Bank said on Wednesday that companies had increased their production levels to support sales and projects, despite additional evidence of declining demand expectations. Growth in new orders fell to its weakest level in nearly two and a half years.
Non-oil producing companies recorded the slowest increase in purchases of production inputs in nearly 3 years, as they are looking to ease recent increases in inventory, while job growth has also declined compared to May.
At the same time, other reports noted that customer discounts affected overall selling prices and ran counter to efforts to pass on the strong increase in input prices to customers.
Naif Al-Ghaith, chief economist at Riyad Bank, said: “The PMI for the non-oil economy recorded at 55.0 in June, marking the slowest pace of expansion since January 2022. The new orders component fell compared to the previous month, suggesting a slight moderation in demand growth.”
He added: “However, the growth in non-oil sectors was supported by a strong increase in output levels. Employment numbers also rose, while suppliers’ delivery times continued to improve.”
In an analytical bulletin, the Saudi Ministry of Economy and Planning explained that the production index recorded 61.1 points, supported by the improvement in commercial activity in the non-oil private sector, and that employment indicators continued to rise, driven by the increase in the number of employees and the stability of supply chains.
The Ministry indicated that the optimistic outlook of business owners and investors continued in light of the improvement in market conditions and the rise in demand for goods and services, which in turn reflects positively on the future outlook for the current year.

 

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US Job Growth Surges in September, Unemployment Rate Falls to 4.1%

A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
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US Job Growth Surges in September, Unemployment Rate Falls to 4.1%

A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo
A woman enters a store next to a sign advertising job openings at Times Square in New York City, New York, US, August 6, 2021. REUTERS/Eduardo Munoz/File Photo

US job growth accelerated in September and the unemployment slipped to 4.1%, further reducing the need for the Federal Reserve to maintain large interest rate cuts at its remaining two meetings this year.
Nonfarm payrolls increased by 254,000 jobs last month after rising by an upwardly revised 159,000 in August, the Labor Department's Bureau of Labor Statistics said in its closely watched employment report on Friday.
Economists polled by Reuters had forecast payrolls rising by 140,000 positions after advancing by a previously reported 142,000 in August.
The initial payrolls count for August has typically been revised higher over the past decade. Estimates for September's job gains ranged from 70,000 to 220,000.
The US labor market slowdown is being driven by tepid hiring against the backdrop of increased labor supply stemming mostly from a rise in immigration. Layoffs have remained low, which is underpinning the economy through solid consumer spending.
Average hourly earnings rose 0.4% after gaining 0.5% in August. Wages increased 4% year-on-year after climbing 3.9% in August.
The US unemployment rate dropped from 4.2% in August. It has jumped from 3.4% in April 2023, in part boosted by the 16-24 age cohort and rise in temporary layoffs during the annual automobile plant shutdowns in July.
The US Federal Reserve's policy setting committee kicked off its policy easing cycle with an unusually large half-percentage-point rate cut last month and Fed Chair Jerome Powell emphasized growing concerns over the health of the labor market.
While the labor market has taken a step back, annual benchmark revisions to national accounts data last week showed the economy in a much better shape than previously estimated, with upgrades to growth, income, savings and corporate profits.
This improved economic backdrop was acknowledged by Powell this week when he pushed back against investors' expectations for another half-percentage-point rate cut in November, saying “this is not a committee that feels like it is in a hurry to cut rates quickly.”
The Fed hiked rates by 525 basis points in 2022 and 2023, and delivered its first rate cut since 2020 last month. Its policy rate is currently set in the 4.75%-5.00% band.
Early on Friday, financial markets saw a roughly 71.5% chance of a quarter-point rate reduction in November, CME's FedWatch tool showed. The odds of a 50 basis points cut were around 28.5%.