:: Saudi Arabia’s non-oil private sector has seen the strongest improvement in new orders since April, according to the latest Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI).

Bolstered by an increase in export orders, the Kingdom’s companies reported a climb in buying levels, with inventory growth reaching a record high.

As a result, the headline PMI reached 55.8 last month, up from 55.7 in July after dipping to an eight-month low of 54.3 in June.

The survey, which is published monthly by the UAE-based bank via financial information services company Markit, reflects business conditions in the Kingdom, with separate reports published for the UAE and Egypt.

Readings over 50 indicate growth in the non-oil economy, while those below suggest deteriorating conditions.

“Saudi Arabia’s non-oil sectors expanded at a solid rate in August, with the headline PMI broadly unchanged from July,” said Khatija Haque, Emirates NBD’s head of M ENA research.

“The recovery in export orders helped boost overall new order growth to the fastest rate in four months in August, while output also showed a sharp rise last month.”

Firms pointed to opportunities arising from new export markets as demand for Saudi Arabian products and services picked up overseas. With new business flowing in, there was a continued growth in output, underpinned by favorable economic conditions, panelists said.

The Kingdom is striving to rebalance its economy by diversifying its sources of income away from oil production, an aim spurred by the steep decline in oil prices. However, despite optimistic expectations for output over the next 12 months, the level of positive sentiment reached its lowest point since October 2016.

Elsewhere in the region, Emirates NBD reported a 30-month high for the UAE’s non-oil private sector economy. The August PMI showed a sharp upturn from July’s 56.0 reading, surpassing long-run average growth rates with a high of 57.3. Panelists credited demand from other GCC countries with helping to fuel a steep rise in new orders and output for UAE companies, citing positive business conditions.

“The August PMI survey shows a strong expansion in the non-oil private sector, underpinned by sharply higher output, new orders and inventories. Firms have indicated that new projects and competitive pricing are supporting demand and activity in the non-oil sector. This is in line with our view that investment ahead of Expo 2020 will be the key driver of the UAE’s non-oil growth over the next few years.”

Discussing new client wins, companies said that enhanced marketing initiatives and good quality projects had a bearing on new business coming in and improvements in the overall health of the sector. Job creation also benefitted, with a marginal expansion evident by the end of August.

A four-month decline in output prices ceased as companies faced higher purchasing costs, with intense competition preventing them from passing the increased burden on to consumers. Firms remain confident of further increases in market demand, maintaining a favorable outlook as economic conditions improve and new business floods in.

In Egypt, export orders also rose sharply, increasing at their fastest rate since May. According to Egypt’s PMI, operating conditions, though still in contraction, showed an increase from 48.6 in July to 48.9 in August, despite high inflationary pressures following an increase in electricity tariffs and an unfavorable economic environment.

Despite this, confidence was at its strongest in six months in Egypt’s non-oil private sector, boosted by high hopes of better economic conditions and stabilisation in currency markets.