The non-oil private sector of Saudi Arabia has regained strength in February, as progress in business confidence and customer demand led to faster expansions in output, new business and purchasing.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) rose to 56.2 in February from 53.2 in January, marking an 18th consecutive month of expansion. The reading was below the series average of 56.8.
The non-oil private sector expanded at the fastest pace since November, ending four straight months of decelerating growth, as fears over the COVID-19 variant faded and demand rose, a survey showed.
David Owen Economist – IHS Markit
“The latest PMI figures confirmed that the impact of the Omicron wave on the non-oil economy was only mild. Following two months of relatively soft (but still positive) growth, momentum rebounded strongly in February as cases began to fall. Overall sales picked up at the quickest rate since last November, despite a further slight fall in export demand, while activity growth moved closer to the peak levels seen towards the end of last year.”
The output sub-index, which measures business activity, jumped to 61.4 in February, in line with the series average, from 53.6 in January. The employment subindex was in expansion territory for the 11th consecutive month, with companies linking more hiring to the increased activity, though it rose only marginally.
New orders grew at the fastest rate in three months after dropping to the slowest rate of expansion in 15 months in January. Export orders, however, bucked the domestic trend for a second month, falling slightly further below the 50-mark that separates growth from contraction.
Businesses responded to high demand by boosting input purchases at the fastest rate in nearly three years, the PMI report said. The weakest cost pressures in six months helped higher purchasing.
“Signs of improving market conditions meant that business optimism was at its highest since January 2021, as firms expect demand growth to remain robust and the impact of the pandemic to subside. Reflecting this optimism, companies raised purchasing activity at the fastest rate since May 2019, aided by a strong improvement in supply chain performance,” Mr. Owen said.
Business confidence regarding future activity picked up to the highest since January 2021, amid hopes that market conditions will improve as the country emerges from the Omicron wave and client orders will continue to strengthen.
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