Saudi posts sustained purchasing growth and rising business activity

Non-oil private sector companies reported a sharp uplift in their employment levels in July, in response to strong domestic demand conditions and rising business activity.

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The Riyad Bank Saudi Arabia PMI also signalled sustained purchasing growth and shorter delivery times, alongside a modest slowdown in input cost inflation. However, sales growth and business confidence eased in July.

Moreover, the rate of business activity expansion eased to its lowest since January 2022.

The headline figure is the seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI).

The PMI is a weighted average of the following five indices: New Orders (30 per cent), Output (25 per cent), Employment (20 percent), Suppliers’ Delivery Times (15 percent) and Stocks of Purchases (10 per cent).

For the PMI calculation the Suppliers’ Delivery Times Index is inverted so that it moves in a comparable direction to the other indices.

The headline PMI posted 56.3 in July, down from 57.2 in June, but above the 50.0 mark that separates growth from contraction in the non-oil private sector. The latest reading signalled a sharp improvement in business conditions since the previous month, driven by growth of output, new orders, stocks of purchases and employment. Non-oil private sector firms reported a strong expansion in output in July.

Work on existing projects and incoming new orders helped to sustain growth, according to qualitative survey reports.