Saudi Arabia’s non-oil sector improved in September due to higher output and new orders
Purchasing Managers' Index (PMI) Reaches Highest Level in Four Months as Domestic Demand Strengthens
Saudi Arabia’s Non-Oil Sector Grows in September Amid Increased Output and New Orders
October 3, 2024
Expansions in outputs and new orders, along with tightening supply conditions, boosted Saudi Arabia’s non-oil economy in September, which saw the kingdom’s Purchasing Managers’ Index (PMI) rise 1.5 points for the second month in a row.
Riyadh Bank’s PMI rose to 56.3 last month from 54.8 in August, marking the Saudi’s highest PMI reading since a sluggish summer that began in May.
The latest reading was close to Saudi Arabia’s long-term average of 56.9, as the growth rate of activity accelerated, with sales momentum showing further improvement.
“Saudi Arabia’s PMI rose to 56.3, the highest level in four months, highlighting a significant acceleration in non-oil private sector growth,” said Naif Al-Qaid, chief economist at Riyadh Bank. “Businesses are responding to strong domestic demand, which plays a key role in reducing Saudi Arabia’s dependence on oil revenues.”
According to Al-Qaida, the non-oil sector’s rise is especially relevant in light of current oil output cuts and dropping global oil prices.
“As oil revenues are under pressure, the strong performance of the non-oil private sector serves as a buffer, mitigating the impact on the country’s economic health. Diversification of revenue streams is critical to maintaining growth in unpredictable oil markets,” he said.
New order volumes increased on improving domestic demand, although survey respondents also reported an increase in new export orders.
Employment numbers improved along with business conditions, although companies reported difficulties in finding skilled staff, leading to skills shortages.
Survey respondents flagged concerns about increased competition, softening future output expectations and a third consecutive cut in sales charges.
Rising material prices, technological costs, and labor all contributed to increased spending, according to reports.
Non-oil inventories rose further in September, prompting some corporations to reconsider their buying strategies. As a result, the rate of growth in purchases fell to a three-year low.
