Saudi non-oil private sector expands at quickest pace in 4 years
Upturn in demand is driven by recovering spending in the domestic economy
Dubai: Business conditions in the Saudi Arabian non-oil economy continued to strengthen at a rapid pace in October, according to latest Purchasing Managers’ Index (PMI) data from IHS Markit.
New orders rose sharply as domestic demand recovered from the pandemic, with the rate of growth remaining close to September’s seven-year high.
“October PMI data showed the non-oil sector recovering at a rapid pace. Growth in output was the strongest seen for nearly four years, driven by a marked rise in client demand as the lifting of COVID-19 restrictions continued to boost economic activity,” said David Owen, Economist at IHS Markit,
Data showed output levels expanded at the sharpest rate since December 2017. The headline PMI posted 57.7 in October, to indicate a sharp improvement in the health of the non-oil private sector. Despite slipping from 58.6 in September, the reading was the second-highest recorded since the start of the COVID-19 pandemic and above the long-run series average.
Demand surge
The upturn in demand was widely driven by recovering spending in the domestic economy following the loosening of COVID-19 restrictions, including on travel.
Employment numbers rose, continuing the growth sequence seen in each month since April. However, the rate of job creation was only marginal, as sufficient capacity to meet demand meant that firms often chose to keep staffing levels unchanged.
Input costs continued to rise solidly during October. The rate of purchase cost inflation quickened to an 11-month high, as greater raw material prices and freight rates were highlighted by surveyed firms.
Business expectations for the next 12 months ticked down in October but remained strong compared to the 2021 average. Firms hoped that the recovery in activity and sales will continue as the economy emerges from COVID-19 restrictions.