Saudi companies operating in the non-oil sector recorded the highest employment growth rate since October 2014. The data was released by Riyadh Bank’s Purchasing Managers’ Index (PMI). The growth rate was made possible by the new business coming into the sector and a noticeable expansion in overall economic activity.
Riyadh Bank indicated that the main PMI rose in October for the second month in a row. It recorded 58.4 points compared to 57.2 points in September. That marks the highest reading in the index since June. Thus, it indicates a significant improvement in the conditions of the non-oil private sector in the kingdom.
Readings above 50 points on this index indicate a general improvement in business conditions.
The bank said that strong labor market conditions led to a faster increase in wages. Thus, the increase in wages raised input cost pressures while also accelerating purchase price inflation. However, companies then cut selling prices for the second time following reports of strong competition eroding market share.
Commercial activity has continued to grow at a significant rate with the beginning of the year’s fourth quarter. That is due to an increase in customer demands and an improvement in economic conditions.
Non-oil companies included in the bank’s study reported a sharp increase in new incoming business. Furthermore, the expansion rate increased to its highest level in four months.
Meanwhile, growth in production and new business has remained high across the manufacturing, construction, wholesale, retail, and service sectors.
Additionally, the latest data from Riyadh Bank’s study indicated a sharp increase in employment in the non-oil sector.
Increased employment in the non-oil sector
The companies surveyed in the study reported that strong demand and production expectations led to an increase in employee numbers. As a result, the total headcount rose to the highest level since October 2014.
Moreover, non-oil companies reported an increase in purchasing activity during October. That signifies a recovery in the growth rate for the first time in 4 months.
Furthermore, the significant increase in the purchase of production supplies is mainly due to increased demand from customers.
Strong growth in the non-oil sector
Nayef Al-Ghaith, senior economist at Riyadh Bank, stated “In October, the index rose to 58.4 points, indicating strong growth in the non-oil sector.”
He added, “This positive development was primarily driven by the significant increase in employment. This reflects the increase in recruitment activity and the size of the workforce.”
He pointed out that the expansion in employment is a promising sign for the Saudi economy. This indicates an increase in demand for labor and a potential improvement in the labor market.
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