Between January to end March, Saudi Arabia’s non-oil private sector created jobs at the fastest pace in 12 years, as businesses looked to expand on higher growth orders.
“Hiring activity was supported by an upturn in demand, which also encouraged an expansion in output and stockpiling of inputs,” says the latest monthly PMI report from Riyad Bank.
But such was the competition that businesses were resorting to heavy discounts, ‘with a decrease recorded for the first time in six months’.
“At the same time, the rate of input cost inflation slid to its weakest in just over four years,” the report added.
Cut down unemployment
“Rising employment rates are a direct benefit of businesses scaling up operations to meet demand,” said Naif Al-Ghaith, Chief Economist at Riyad Bank.
“By providing more job opportunities, Saudi Arabia aims to nurture a skilled and ambitious workforce, reducing the unemployment rate to 7% for Saudi nationals.”
Of course, the new US tariffs on imports will have a significant say on what comes next. The Saudi stock market already felt the heat Sunday (April 6), dropping a near 7% and with the biggest losses in 5 years. The US tariff on Saudi Arabian imports into that country is set at 10%.
A barrel of Brent crude is around the $64 level. As always, how oil prices fare during this period will be significant. Investors are hoping that the GCC economies will be among those able to reach a quick deal with the US.
March PMI
But in March, the Saudi PMI (Purchasing Managers Index) score was an extremely healthy 58.1, reflecting ‘a robust improvement in business conditions’.
“Although the lowest in five months, falling from 58.4 in February, the PMI remained marginally above its series average of 56.9,” says the Riyad Bank report.
“Companies responding to the survey signaled a robust demand environment at the end of the first quarter. This was highlighted by a marked increase in new order volumes, although the rate of growth softened further from the near 14-year record seen in January.
‘Greater marketing efforts, lower selling prices and a broader improvement in economic conditions were commonly noted as driving sales. New orders from foreign markets also rose, although the rate of expansion slowed.’
Domestic demand
Saudi businesses will be hoping for the lower cost inflation environment to continue to offset some of the tariff turbulence. Domestic demand remains solid, according to industry sources, which will be a huge plus in the near-term.
“On the pricing front, the latest data indicated a marked easing of input cost pressures in March,” says the Riyad Bank report. “The rate of inflation dropped to its lowest level in just over four years, as firms saw a much weaker increase in purchase prices. Wage inflation also decelerated, although it remained above the long-run trend.”
If these can provide sufficient cushion, Saudi businesses will take it.
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