Saudi Arabia’s non-oil economic activities have touched its highest level in the past 10 months, according to the latest Purchasing Managers’ Index (PMI) of IHS Markit.
The rise in output growth of the Saudi economy in November was driven by the increase in sales and strengthened business confidence, which indicates that the country’s economy has started to recover from the impact of the pandemic.
As per the PMI survey over the past months, the input purchasing has increased and the employment growth has also recovered for the first time since January. Meanwhile, the input cost inflation also quickened, leading to a stronger increase in average output charges.
Saudi Arabia’s PMI has picked up from 51 in October to 54.7 in November which signals the strongest improvement since January. The index is now marked above 50.0 with no change for three months in a row indicating a sustained economic recovery after the fall due to the pandemic.
The indices vary between 0 and 100, with a reading above 50 showing an overall increase compared with the previous month and below 50 an overall decrease.
During November, the non-oil private sector output has grown at the fastest rate in 10 months, as panelists highlighted the recovery of market conditions and a steeper increase in new work. Both domestic and foreign sales got accelerated last month, marking only the second upturn in new export orders since February.
“A third successive rise in the Saudi Arabia PMI pointed to an economy getting back on its feet in November. Supported by output and new business growth reaching 10-month highs, the data suggests a strong end to the year for the non-oil private sector. Notably, employment started to rise, while business confidence strengthened in the wake of encouraging vaccine news and sharper demand growth.”
Accelerated rise in output and new orders have made Saudi companies to increase their purchasing activity during November. Also, hiring activity turned positive and the number of companies linked increased employment to rising demand.
Commenting on the index rate, Saudi economist and financial analyst Talat Zaki Hafiz stated that “the improvement is due to many factors, such as the reopening of the market with the ease in lockdown and finally the lifting of the curfew. The return to normality has had a significant impact on private sector performance.”