The non-oil private sector of Saudi Arabia has continued to expand in June at a fast pace and employment in the country hit a 19-months high, indicating the largest Arab economy’s recovery from the coronavirus crisis.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) stood at 56.4 in June, unchanged from May, maintaining its fastest pace of growth since January. 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.
An increase in new orders, the fastest in five months, boosted business activity, reflecting the easing of coronavirus-related restrictions. Input prices continued to surge but at a slower rate than in May, suggesting that inflationary pressures may have peaked.
“Demand growth in the Saudi Arabian non-oil sector ramped up again in June, with the latest data signaling the strongest rise in sales since January. It was also encouraging to see a slight easing in overall input price inflation for the first time in 2021-to-date. This may be attributed to the relative strength of domestic supply chains, which have not yet been affected by global supply difficulties.”
Confidence for future business activity hit a five-month high, with firms hoping economic recovery will accelerate further in the second half of the year. The expansion of the private sector and the creation of jobs are core targets of Saudi reforms targeted at diversifying the economy of the world’s top oil exporter.
According to the survey, employment in the non-oil private sector rose at the quickest pace since November 2019. This echoed recent official Saudi data that showed unemployment among Saudi citizens dropped to 11.7 percent in the first quarter of this year from 12.6 percent at the end of 2020.