04 Apr 2024
RIYADH: Saudi Arabia’s non-oil private sector saw steady growth in March, with output accelerating to a six-month high, as reflected by the Kingdom’s Purchasing Managers’ Index.
The economic index reached 57 in March, showing a slight decrease from 57.2 in February, according to a report by the Riyad Bank Saudi Arabia PMI by S&P Global.
Any PMI reading above 50 indicates growth in the non-oil sector, while readings below that signal contraction.
Saudi Arabia’s PMI in March surpassed that of other Gulf Cooperation Council countries such as the UAE, Egypt, and Kuwait, indicating that the Kingdom’s non-oil sector growth is in line with the goals outlined in Vision 2030.
Strengthening the non-oil sector is crucial for Saudi Arabia as the Kingdom steadily diversifies its economy away from oil.
The US-based firm reported that operating conditions in Saudi Arabia’s non-oil private sector exhibited robust improvement at the end of the first quarter, with companies emphasizing significant increases in order books and new customers.
Naif Al-Ghaith, chief economist at Riyad Bank, said: “The PMI for Saudi Arabia showcased a notable upswing as the non-oil economy exhibited significant expansion in the most recent period. This expansion was primarily fueled by a surge in demand across various sectors, indicating a robust economic performance.”
He added: “Business activity experienced a substantial uptick, marking the most significant growth in six months. The positive momentum also prompted accelerated purchasing activities and additional hiring, underscoring a buoyant market outlook.”
According to the report, the rise in output levels among non-oil private sector firms was driven by robust new orders and strong demand conditions.
Similarly, new orders placed at non-oil firms rose sharply in March, with the expansion rate accelerating for the second month in a row.
The survey also revealed that demand from foreign customers increased in March.
The report indicated rising optimism among businesses in the non-oil sector for the coming 12 months, driven by anticipations of growth in demand.
“The surge in orders and customer acquisition not only bolstered current operations but also laid the foundation for continued expansion and potential business growth in the foreseeable future,” noted Al-Ghaith.
He added: “Moreover, the concurrent easing of cost pressures, particularly in terms of wages, provided companies with greater flexibility and resources to invest in their operations and workforce, fostering a conducive environment for sustained economic progress and development in Saudi Arabia.”
The report further noted that private sector firms in the Kingdom witnessed a decrease in cost inflation for the second consecutive month.