On a bustling street in Riyadh, the capital of Saudi Arabia, the flow of vehicles on February 16, 2021, hinted at a thriving city scene. However, the true measure of the country’s economic vitality lies in its non-oil business sector, which continued to exhibit steady growth in April.
The seasonally-adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) maintained a steady reading of 57.0 in April, mirroring the figures from March, and staying comfortably above the 50.0 threshold that separates expansion from contraction.
While the Output subindex experienced a minor dip to 61.9 in April from the six-month peak of 62.2 in March, the numbers still signified robust demand conditions. The Wholesale & Retail sectors saw the most significant rise in output.
This uptrend hints at an anticipated spike in the non-oil GDP, likely exceeding the 4.5% mark for this year,
noted Naif Al Ghaith, chief economist at Riyad Bank. He also pointed out the remarkable increase in new orders and inventory levels, indicating a proactive market response to heightened demand.
Despite a slowdown in new order growth to a reading of 61.0 in April from 64.0 in March, sales remained buoyed by solid domestic business conditions. Export orders also continued to expand, particularly driven by the manufacturing sector.
The Saudi economy faced a contraction of an estimated 1.8% year-on-year in the first quarter, largely due to a decline in oil activities. Yet, the non-oil GDP presented a more optimistic picture with a 2.8% year-on-year growth, according to preliminary government data. However, a closer look at quarterly figures revealed a slight deceleration in momentum with non-oil GDP rising only by 0.5% from the previous quarter, and government activities decreasing by 1%.
Nevertheless, the business outlook for the next 12 months remained robust in April, with positive sentiment widespread across various sectors, as per the survey.
Reporting by Rachna Uppal; Edited by Toby Chopra
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