Saudi’s non-oil private sector activity reverses a five-month downtrend in August

The Kingdom’s non-oil private sector activity grew at a faster pace in August, on the back of an increase in new orders, growth in government spending, and higher foreign sales, according to the Riyad Bank Saudi Arabia PMI (pdf).

Stronger expansion: The headline PMI figure recorded a slight increase to 54.8 in August, up from 54.4 in July, reversing a five-month downward trend. Despite the month-on-month growth, the index is below the 56.9 long-run average, the report reads. A score of 50.0 is the cutoff point that separates growth from contraction.

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Selling at cheaper prices: Growth in the non-oil private sector output saw the slowest momentum last month since the beginning of 2022, forcing businesses to reduce prices for the second month in a row in order to stimulate demand.

Costs were a mixed bag: Input costs fell to their lowest level since July 2023, while staff wages increased as firms boosted salaries.

Purchasing activity and stock levels were also on the rise last month, accommodating new orders and reducing backlogs at the fastest rates since June 2020.

Exports on the rise: “The increase in new export orders, although slower than the overall growth, shows that Saudi companies are finding opportunities abroad, despite facing tough competition in international markets,” said Naif Al Ghaith, chief economist at Riyad Bank.

A bullish outlook: The sector’s employment rate saw the sharpest increase in a decade, “signaling that businesses are increasingly confident in their expansion plans,” Al Gaith added. Businesses’ expectations for the year ahead are “rising to their strongest since March,” the report reads.

FROM THE REGION-

Egypt’s PMI rose to 50.4 last month, placing the country’s private non-oil sector in growth territory for the first time since November 2020, according to S&P Global’s Egypt PMI (pdf).

Kuwait’s PMI fell below 50.0 in August for the first time in over a year and a half. The index came in at 49.7, down from the 51.5 recorded in July, according to Kuwait’s S&P Global PMI (pdf).

Qatar’s PMI bumped up to 53.1 in August, up from 51.3 in July, according to Qatar Financial Center’s PMI (pdf).