Business

Saudi Arabia Non-Oil Business Activity Rebounds in March- PMI

Business activity in Saudi Arabia’s non-oil private sector boomed at the end of the first quarter, according to the seasonally-adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI).

Business activity in the sector increased significantly, hitting a six-month high, fueled by an increase in companies’ order books and new customers, the latest PMI survey data showed.

The PMI slipped to 57.0 in March, slightly lower than 57.2 in February, but stayed well above the neutral 50.0 mark that separates growth from contraction.

It is worth noting that the PMI is a weighted average of 5 indices:

  • New Orders (30%)
  • Output (25%)
  • Employment (20%)
  • Suppliers’ Delivery Times (15%)
  • Stocks of Purchases (10%)

Output in the non-oil businesses grew significantly in March, to the highest level in six months, bolstered by robust order intakes and strong demand conditions.

Similarly, new orders placed at non-oil companies saw a sharp increase in the latest survey period, and the expansion rate accelerated for the second month in a row. Three times as many firms experienced a rise in business volumes compared to those registering a decline.

The latest data showed an improvement in demand from foreign customers, as it marked the first sustained month-on-month growth since mid-2023.

Also, employment rose to a moderate pace that was quicker than the survey average for the second month in a row. As firms hired additional workers to support growing workloads.

Commenting on the data, Naif Al-Ghaith PhD, Chief Economist at Riyad Bank, said: “Overall, the latest Saudi PMI data underscores a robust and dynamic non-oil economy, driven by a surge in demand and heightened business activity.”

He added that “the strong performance witnessed across various sectors, coupled with the notable increase in order books and new customers, signifies a resilient market poised for growth.”

Al-Ghaith pointed out that the accelerated purchasing growth and additional staff hiring “further indicate a positive trajectory for the economy, supported by a reduction in cost pressures”.

“These developments collectively point towards a promising outlook for the Saudi Arabian economy, highlighting its resilience and potential for continued expansion and prosperity,” he said.

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