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Multiple sectors in Saudi Arabia are gunning for higher growth through 2024. Tourism and manufacturing should be the biggest gainers. Image Credit: Bloomberg

Dubai: Saudi businesses closed out 2023 on a six-month high, powered by new orders and pricing momentum. New hiring activity across the Saudi private sector continues, though slightly down on the levels seen in November.

Overall, businesses in Saudi Arabia will find themselves better placed to take on 2024, according to the December PMI (Purchasing Managers Index) reading by the Riyad Bank.

Higher new business inflows were at the 'sharpest rate' since June. December's pace of sales growth was also among the quickest since 2014 as firms picked up new clients and demand strengthened.

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“Growth was supported by a sharp rise in business activity and exports, highlighting the resilience and strength of the non-oil economy,” said Naif Al-Ghaith, Chief Economist at Riyad Bank. “The export sector experienced the fastest increase since July, driven by government initiatives and the emergence of new market opportunities.”

The PMI score – which marks business sentiment and how they are doing on capital expenditure, hiring, etc. – was at 57.5 for December, helped by the strides made by business activity in the Saudi manufacturing sector.

Growth was supported by a sharp rise in business activity and exports, highlighting the resilience and strength of the non-oil economy

- Naif Al-Ghaith of Riyad Bank

The Saudi economy continues to hum along nicely, with all of the systemically vital sectors sticking to growth. As oil prices continue to hold up, the rub off should continue to felt on the non-oil part of the economy.

An all-year run

“The positive performance of the non-oil sector throughout 2023 has exceeded the expansion witnessed in the previous year, further demonstrating the effectiveness of policies aimed at reducing dependence on oil revenues," said Al-Ghaith. "These efforts have helped bolster the country's non-oil industries and enhance their competitiveness."

Modest gains on new hiring

Saudi businesses continue to hire, especially 'skilled staff to reduce workloads'. Even then, the overall rise in employment during December was only modest. "The uplift did support a decrease in backlogs of work, albeit the softest in four months," the report adds.

Businesses in the Gulf typically do slow down on new employment generation during the final weeks of the year, instead waiting to pick up the thread from mid-January onwards. This could well happen this year as well, say HR consultants, adding that demand for project managers continues to run high.

In fact, construction firms are more optimistic about their growth prospects during 2024, according to the Riyad Bank report.

Overall, "To attract and retain talent, wages have also seen an upward trend," said Al-Ghaith. "This positive employment outlook reflects the success of the government's efforts to create a diverse and robust economy, offering job opportunities and improving the standard of living for its citizens."