In April, the PMI for Saudi Arabia increased to 59.6 due to the improvement of non-oil business activities.
RIYADH: The latest report from the Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) showed an improvement in Saudi Arabia’s non-oil business activities in April. The report indicated that strong domestic demand resulted in an increase in new orders at the fastest rate since September 2014. The PMI reading for April was 59.6, which is a slight increase from March’s reading of 58.7. While it is slightly lower than February’s peak of 59.8, it is still a strong indicator of non-oil private sector growth in the Kingdom.
The report noted that businesses in Saudi Arabia remain optimistic about their growth prospects for the year ahead, despite a slight decrease in optimism levels to a four-month low. The chief economist at Riyad Bank, Naif Al-Ghaith, attributed this positive outlook to rising tourism numbers, higher consumer spending, new business opportunities related to major infrastructure projects, and long-term business expansion plans. He also highlighted that the rate of job creation in April was slightly stronger than seen on average in the first quarter of 2023, indicating continued economic growth.
However, the report also noted that new orders from abroad declined for the first time since February 2022 due to intense competition and less favorable economic conditions in overseas markets. Additionally, the report revealed growing cost pressures, with both input costs and staff wages on the rise again. The recent weakness in the US dollar has resulted in a costlier import of raw materials, while efforts to boost staff retention and business performance resulted in another upturn in average wages.
As Saudi Arabia continues its economic diversification efforts in line with Vision 2030, Jihad Azour, director for the Middle East and Central Asia at the International Monetary Fund, noted that the Kingdom’s economy is edging closer to reducing its dependence on oil. Azour highlighted that the growth of the non-oil economy in Saudi Arabia is driven by government-led reforms and the growth of private investment in new sectors.
The PMI report reinforces Saudi Arabia’s continued efforts to diversify its economy and reduce its reliance on oil. While the decline in new orders from abroad signals a potential challenge, the growth in domestic demand and overall job creation bodes well for the country’s economic prospects. The report’s positive outlook for the future also underscores the Kingdom’s commitment to Vision 2030 and the potential for continued growth and development in the years ahead.
The Riyad Bank Saudi Arabia Purchasing Managers’ Index report provides valuable insights into the state of the Kingdom’s non-oil private sector economy. It is an important tool for policymakers, businesses, and investors alike, as it offers a comprehensive overview of the country’s economic performance and outlook.
The recent rise in the PMI is a positive sign for Saudi Arabia’s economic recovery, as it indicates that the country’s non-oil private sector is growing at a healthy rate. The report also shows that job creation has continued for the 13th month in a row, reflecting a sustained period of growth and expansion in the sector.
Despite these challenges, the report suggests that Saudi businesses remain optimistic about their growth prospects, with strong sales pipelines and confidence in the domestic business environment. This positive sentiment is a testament to the success of the government’s Vision 2030 economic reform program, which aims to reduce the country’s reliance on oil and promote private sector growth and innovation.
Overall, the Riyad Bank Saudi Arabia Purchasing Managers’ Index report is a valuable tool for understanding the country’s economic performance and outlook. Its findings provide useful insights for policymakers, businesses, and investors, and highlight the need for continued efforts to support the growth and diversification of the Saudi economy.
