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Friday, Feb 23, 2024

Saudi PMI hits 59.6 in April as non-oil business activities improve

Saudi PMI hits 59.6 in April as non-oil business activities improve

Saudi Arabia’s overall non-oil business activities witnessed an improvement in April, as strong domestic demand triggered an increase in new orders at the fastest rate since September 2014, an economy tracker revealed.
The latest Riyad Bank Saudi Arabia Purchasing Managers’ Index report, formerly known as the S&P Global Saudi Arabia PMI, revealed that the Kingdom’s PMI went up to 59.6 in April from 58.7 in March. This is fractionally lower than the eight-year peak in February, when the metric hit 59.8.

According to the index, PMI readings above the 50-mark show non-oil private sector growth, while those below 50 signal contraction.

Naif Al-Ghaith, the chief economist at Riyad Bank, said: “April PMI data highlighted another steep expansion of business activity across the Kingdom’s non-oil private sector economy. We have witnessed rising tourism numbers, higher consumer spending and new business opportunities related to major infrastructure projects.”

“Moreover, long-term business expansion plans have made the rate of job creation slightly stronger than seen on average in the first quarter of 2023,” he added.

According to the report, job creation continued in April, as signaled by a rise in total employment numbers for the 13th month in a row.

The report, however, noted that new orders from abroad declined for the first time since February 2022 due to intense competition and less favorable economic conditions in overseas markets.

“On the prices front, we have observed growing cost pressures as both input costs and staff wages have been rising again. The recent weakness in the US dollar has resulted in a costlier import of raw materials, while efforts to boost staff retention and business performance resulted in another upturn in average wages,” said Al-Ghaith.

The report added that businesses in Saudi Arabia remain upbeat about their growth prospects for the year ahead, despite the fact the degree of optimism slipped to a four-month low, but remained well above the average in 2022.

Businesses’ future output expectations were still optimistic, said Al-Ghaith, adding: “The positive sentiment reflected strong sales pipelines, alongside confidence regarding domestic business conditions and the long-term impact of government economic policy objectives.”

As Saudi Arabia continues its economic diversification efforts, in line with the goals outlined in Vision 2030, Jihad Azour, director for the Middle East and Central Asia at the International Monetary Fund, said the Kingdom’s economy is edging closer to reducing its dependence on oil.

Azour further noted that the growth of the non-oil economy in Saudi Arabia is driven by government-led reforms and the growth of private investment in new sectors.

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