RIYADH: Saudi Arabia’s purchasing managers' index rose to 57.2 in September, up from 56.6 in August, as business confidence in the non-oil private sector improved, showed an economy tracker.
According to the Riyad Bank Saudi Arabia PMI report, compiled by S&P Global, the Kingdom witnessed a sharp increase in economic activity and new businesses in the non-oil private sector in September, signaling improved market conditions and rising client orders.
The upswing was attributed to increased business intake, with 27 percent of surveyed firms reporting output growth in each of the four major sectors monitored by the survey.
“The non-oil economy continues its growth despite the challenges arising from the current monetary policy conditions,” commented Naif Al-Ghaith, chief economist at Riyad Bank in the report.
He added: “Our view is that non-oil GDP (gross domestic product) will continue to support growth and remain above 5.5 percent for 2023 supported by the ongoing reforms under the Vision 2030.”
Sales growth also played a vital role in bolstering economic activity.
According to the report, both improved market conditions and discounts offered by firms to combat competition were key catalysts for the increase in client orders.
However, despite contributing to the growth in sales, competitive pressures have limited sales for some businesses and led to a drop in selling charges for the second time in three months.
Purchasing activity has increased to meet input requirements and, according to the report, employment levels have witnessed a modest but noteworthy rise, marking the fastest increase in five years.
Therefore, with rising raw material costs and higher wages, the increase in purchasing and employment has further constrained profit margins but led to a significant reduction in outstanding business, which was the quickest in a year.
The report concluded that output expectations picked up sharply in September as firms were hopeful that market conditions and rising sales would continue to support expansion in activity.