According to the Riyad Bank Saudi Arabia PMI report, compiled by S&P Global, the non-oil private sector of Saudi Arabia’s economy experienced a strong growth in November. This expansion was fueled by high demand and the largest surge in new business inflows, despite the presence of cost pressures.
Read more: Saudi’s PMI hits 57.2 in October: S&P
However, the Purchasing Managers’ Index (PMI) of Saudi Arabia’s economy decreased from 58.4 in October to 57.5 in November, as per the report.
This decline can be attributed to slower rates of staff and inventory growth, along with a notable decrease in delivery times. However, despite this drop, the Saudi PMI still remained comfortably above the neutral threshold of 50.0. This indicates a considerable improvement in business conditions within the non-oil private sector economy of the Kingdom, as highlighted in the report.
New orders
The new orders index, which is one of the major contributors to Saudi’s PMI, reached its highest level in five months. This indicates positive developments in market conditions, customer numbers, and investment spending.
Naif Al-Ghaith, chief economist at Riyad Bank, stated in the report that despite the growth in new orders and output, the figures for new exports remained relatively low compared to the non-oil export data published by the General Authority for Statistics (GASTAT).
He further explained that this underperformance in exports can primarily be attributed to the petrochemical sector, which constitutes over 29 percent of non-oil exports.
Upsurge in cost inflation
Furthermore, the most recent survey data revealed a noteworthy upsurge in cost inflation within the non-oil economy, primarily driven by the fastest increase in overall input costs since June 2022, particularly in the construction sector. Although wage inflation moderated, it remained higher than average due to efforts to retain staff in the face of rising living costs.
Despite experiencing a slightly slower growth rate compared to the previous month’s record, the non-oil sector still witnessed significant employment growth.
Another factor influencing the PMI is the response of prices to input costs. In recent months, input prices have been on the rise, and this trend has begun to impact the prices of final goods and services, stated Al-Ghaith.
He further noted that due to competitive pressures, the impact on overall prices had been somewhat restrained. Al-Ghaith further added that this month, output prices increased, albeit at a slower pace than the increase in input prices.
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