RIYADH: Saudi Arabia’s Purchasing Managers’ Index touched 58.2 in January 2023, the second-highest since September 2021, as the Kingdom steadily diversifies its economy in line with the goals outlined in Vision 2030, according to a report.
The latest Riyad Bank Saudi Arabia Purchasing Managers Index report, formerly the S&P Global Saudi Arabia PMI, noted that the confidence among non-oil private sector firms in the Kingdom climbed to a two-year high in January.
In December, the Kingdom’s PMI stood at 56.9, while in November, the index hit 58.5, the highest in the last 16 months.
According to the index, released by S&P Global, readings above the 50-mark show growth, while those below 50 signal contraction.
“Saudi Arabia is continuing its strong performance and outperformed the global economic trends for activity and demand. The non-oil sector is starting this year with a strong headline growth at 58.2 in January, recording the second highest growth since September 2021,” said Naif Al-Ghaith, chief economist at Riyad Bank.
He added: “This growth confirms the Saudi position as the fastest-growing economy among the Group of 20 countries despite economic headwinds.”
According to Al-Ghaith, the rise in business confidence in January was primarily driven by the ongoing improvement in the business environment, private-sector employment, and increased foreign investment with governance and labor market reform.
According to the report, new order inflows continued to rise at a marked pace in January, as firms typically commented on improving demand conditions and stronger client orders.
The report further added that demand from foreign clients increased rapidly and to a greater degree in January than at the end of 2022.
“Inflation is expected to soften in the upcoming months with the reduction in input cost pressures and the continued improvements in supply chains. We have started to see weaker increases in output prices corresponding with input costs. The rise in output prices was the softest in nearly a year, despite the growth in new orders which remained marked in January,” added Al-Ghaith.
The report went on and said that non-oil activity levels expanded sharply in January, with around a third of all surveyed companies seeing an uplift in the month.
“The degree of positivity picked up to the highest level since January 2021, as panellists largely expect demand growth to continue and market conditions to improve,” the report added.
As outstanding business levels fell for the consecutive eighth month, hiring growth moderated from December’s near five-year record.
According to the report, supply chain conditions remained relatively healthy at the start of 2023, while vendor performance improved at a solid pace as suppliers responded positively to requests for faster deliveries.