In March, Saudi Arabia’s non-oil private sector exhibited a robust growth surge, reaching a peak in output not seen in the past six months, as indicated by the nation’s Purchasing Managers’ Index (PMI).
The PMI for the Kingdom registered at 57, marking a slight dip from February’s 57.2, based on data released by the Riyad Bank Saudi Arabia PMI report conducted by S&P Global.
A PMI measure above the 50 threshold suggests expansion within the non-oil sector, while a figure below points to a contraction. The PMI for the Kingdom in March stood out, surpassing those of other Gulf Cooperation Council (GCC) nations like the UAE, Egypt, and Kuwait, aligning with the developmental aspirations of Vision 2030.
Intensifying the non-oil sector is a strategic goal for the Kingdom as it transitions its economy away from oil dependence.
Reports from a US-based firm highlighted that Saudi Arabia’s non-oil private sector saw significant improvements in operating conditions at the end of Q1, characterized by notable growth in order volumes and an influx of new clientele.
Chief Economist at Riyad Bank, Naif Al-Ghaith, remarked, The non-oil economy of Saudi Arabia displayed a marked expansion, propelled by heightened sector-wide demand, which translated into a potent economic performance.
Al-Ghaith observed that business activities surged, recording the highest growth in a semiannual period, with the positive trajectory fuelling increased purchasing and hiring, reflective of an optimistic market forecast.
Strong demand conditions and a significant uptick in new orders were cited as the drivers behind the increased output levels among Saudi non-oil private sector firms.
Moreover, March saw a sharp acceleration in new order rates for the second consecutive month, with a notable rise in demand from international customers.
Business optimism in the non-oil sector is on an upward trend, spurred by expectations of demand growth over the next year. Al-Ghaith emphasized, The influx of orders and customer base expansion not only strengthens current operations but also sets the stage for ongoing growth and prospective business opportunities.
Additionally, he pointed out that easing cost pressures, particularly in the salary domain, offered companies more operational and workforce investment latitude, thereby fostering an environment conducive to sustained economic advancement in Saudi Arabia.
It was also noted that private sector firms in the Kingdom experienced reduced cost inflation for two months in succession.
In parallel, the UAE’s non-oil private sector continued to strengthen in March, with a surge in business optimism reaching a six-month high. The UAE’s PMI stood at 56.9, slightly lower than the prior month but still indicative of activity expansion.
Kuwait’s private sector reported the quickest escalation in new orders since 2020, with the PMI climbing to 53.2 in March from 52.7 in February.
Qatar’s PMI saw a minor drop to 50.6 in March from February’s 51, but it remained indicative of an ongoing improvement in non-energy private sector business conditions.
Conversely, Egypt’s non-oil private sector continued its downward trajectory in March, with the PMI resting at 47.6, slightly up from February’s 47.1 but still below the pivotal expansion threshold.