DUBAI, Nov 3 (Reuters) - - Growth in Saudi Arabia's non-oil private sector slowed to a record low in October as government austerity steps in response to low oil prices continued to drag on the economy, a survey of businesses showed on Thursday.


The seasonally adjusted Emirates NBD Saudi Arabia Purchasing Managers' Index fell to 53.2 last month, its lowest since the survey was launched in August 2009, from 55.3 in September. A level above 50 means business is expanding.


The government announced in late September that it was cutting allowances for workers in the public sector, where some two-thirds of Saudis are employed. Some analysts estimated this might reduce those people's disposable incomes by about 20 percent, so the step could have a big impact on the economy.


“The decline in the Purchasing Managers’ Index in October was not unexpected, given the additional fiscal measures that came into effect last month including public sector wage cuts," said Khatija Haque, head of regional Research at Emirates NBD.


"External demand also softened further last month. However, the PMI reading remains well above the neutral 50.0 level, indicating growth in the non-oil sector, albeit at a slower rate than last year.”


Growth in output dropped to 57.1 in October from 61.5, while new order growth slowed to 54.8 from 56.5. Employment growth stayed positive but at 50.6, was the slowest since April. Output price inflation was negative for a second straight month in October while input price inflation accelerated.