Saudi’s business conditions across non-oil sector at more than 7-year high
Business activity in the non-oil private sector economy of Saudi Arabia continued to improve in November, growing at the fastest pace since August 2015 as new order growth accelerated to a 14-month high, leading to a sharper rise in purchasing activity.
The reading on Riyad Bank’s purchasing managers’ index for Saudi Arabia jumped to 58.5, from 57.2 in October, well above the neutral 50 mark that separates growth from contraction.
The reading was also the highest since September 2021 and above the long-run series average of 56.8.
Non-oil companies cited a sharp rise in new business in November, which survey panellists attributed to improving economic conditions, rising client demand and increased investment.
The rate of sales growth was at its sharpest in more than a year, with more than 41 per cent of surveyed businesses reporting an increase from the previous month.
In addition to strong domestic conditions, companies registered the quickest increase in new export business since November 2015, with output levels expanding at their strongest pace in more than seven years across the manufacturing, construction, wholesale and retail and services sectors.
Rising demand encouraged non-oil businesses to expand their purchases in November while input buying rose at the second-fastest rate since August 2015, leading to a robust increase in stock levels.
The outlook for output was higher in November, leading to the most optimistic forecast for the coming year since January 2021, according to survey.
Saudi Arabia’s economy grew by 12.2 per cent in the second quarter, exceeding initial estimates and registering the fastest expansion in more than a decade on the back of higher oil prices.
The annualised real gross domestic product growth in three months to the end of June was the quickest since the third quarter of 2011, according to the kingdom’s General Authority for Statistics (Gastat).
Oil-related economic activity in Saudi Arabia, Opec’s biggest crude producer, jumped by about 23 per cent on an annual basis in the second quarter. Non-oil economic activity rose 8.2 per cent, revised higher by Gastat from an earlier 5.4 per cent flash estimate.
The pace of growth of the kingdom’s non-oil economy will rise to 4.2 per cent in 2022 before returning to its medium-term potential of 4 per cent.
The Saudi economy is set to grow 8.7 per cent this year, according to Jadwa Investment, while the Organisation for Economic Co-operation and Development projects an expansion of as much as 9.9 per cent this year.
Meanwhile, Egypt’s S&P Global purchasing managers’ index reading, a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy, fell to 45.4 in November, from 47.7 in October. The reading was the second lowest since June 2020, extending the current sub-50 sequence to two years.
The rate of decline in new orders deepened in November, due to customers cutting back on spending as a result of higher inflation and interest rates. A sharp depreciation of the Egyptian pound against the US dollar, which paved the way for a new agreement with the IMF, also contributed to the latest decline in operating performance.
