A survey reported on Monday that the non-oil private business segment in Saudi Arabia was well within growth territory in December, though its growth rate slowed to its lowest in four months, and the growth of new orders kept declining.
The seasonally-adjusted Riyadh Bank Saudi Arabia Purchasing Managers’ Index (PMI) decreased to 57.4 percent in December, compared with 58.5 percent in November, showing that growth has cooled down for the second consecutive month.
Even though it slowed down, the headline PMI reading was marginally higher than its long-run average of 56.9 percent. PMI readings above 50.0 percent indicate growth in activity, while those below point to contraction.
The non-oil business output surged dramatically, fueled by increased new business, continuing projects, and greater investment expenditure. Nevertheless, the growth rate was not the highest since August.
The new orders subindex dropped to 61.8 percent in December compared to the 64.6 percent in November, but the growth rate was the lowest in four months.
Companies mentioned that the improvement of the economic situation and effective marketing campaigns were driving factors, yet they were worried about market saturation.
Riyad Bank’s Chief Economist, Naif Al-Ghaith, said, “Export demand recorded a marginal increase for the fifth consecutive month, but the latest rise was the weakest in this sequence, suggesting that external demand remains supportive but uneven.”
He stated, “Overall, demand conditions point to resilience rather than acceleration as firms navigate a more competitive environment.”
The employment growth was also strong, and companies were increasing their workforces. The inflationary forces grew, and there was an increase in the prices of inputs because of the fact that purchase costs were increasing, thus resulting in higher prices of output.
Business confidence for the upcoming years was subdued, dampened by concerns over increasing market competition, with moderate expectations for future expansion.
