Saudi non-oil private sector keeps up solid growth
Saudi Arabia’s non-oil private sector kept up its solid pace of growth in March as output expanded at the fastest rate in over four years, a survey showed.
The headline seasonally adjusted S&P Global Saudi Arabia Purchasing Managers’ Index (PMI) for the whole economy rose to 56.8 in March from 56.2 in February, exactly in line with the series average since August 2009.
“The Saudi Arabia PMI continued to signal strong growth in the non-oil economy in March, as new business and activity rose sharply in line with recovering client demand,” said David Owen, an economist at S&P Global.
Supply chains also displayed strength, with lead times shortening to the greatest extent for three years. In turn, companies raised their purchasing at the fastest rate since December 2017, supporting higher capacity levels.”
The output sub-index rose to 62.4 from 60.4 in February, above the series average of 61.4. New orders also rose and new export orders returned to growth after two months of contraction.
Sentiment regarding output over the next 12 months remained in growth territory, though less so than in February and below historical trends. About 14 percent of respondents expected higher output in the next year.
The employment sub-index dipped below the 50.0 mark into contraction territory for the first time in a year.
“Sector-level data indicated that reductions in staffing at construction and wholesale & retail firms contrasted with expansions in services and manufacturing,” the PMI report said.
Cost pressures in the kingdom increased in March as already high commodity prices turned volatile following Russia’s invasion of Ukraine. Staff wages also increased, though marginally.
“Rising petrol and raw material prices greatly added to firms’ expenses sheets. However, with sales also improving, businesses were able to increase their output prices accordingly – both costs and charges rose at the strongest rates since August 2020,” Owen said.