New Business Sparks Rebound In Saudi Non-Oil Activity In September – PMI Report
Riyadh, Saudi Arabia – In a positive turn of events, Saudi Arabia’s non-oil business activity rebounded in September, marking a noteworthy acceleration from the 11-month low observed the previous month. According to the latest data from the Riyadh Bank Saudi Arabia Purchasing Managers’ Index (PMI), this resurgence was driven by higher sales, providing a glimpse of optimism for the Kingdom’s economic recovery.
The seasonally adjusted Riyadh Bank Saudi Arabia Purchasing Managers’ Index climbed to 57.2 in September, up from August’s 56.8. Notably, the August figure has represented the lowest point in nearly a year, dating back to September 2022. This uptick positioned the index comfortably above the crucial 50-point threshold, signifying expansion, and restored it to levels beyond its long-term average of 56.9.
A key highlight of the PMI report was the significant rebound in overall output, which had previously languished at a 19-month low in August. The sub-index for overall output surged to 62.8 in September, up from 56.1 the preceding month. This resurgence in output was particularly underpinned by the expansion of new business opportunities.
The sub-index for new orders also exhibited remarkable growth, surging by four points to reach 64.2. However, it is important to note that the pace of expansion remained slightly below the average witnessed earlier this year.
Naif Al-Ghaith, Chief Economist at Riyadh Bank, expressed optimism regarding the resilience of Saudi Arabia’s non-oil economy. He noted that despite the challenges posed by prevailing monetary policy conditions, the non-oil GDP is anticipated to continue its growth momentum. Al-Ghaith predicted that it would remain above 5.5% for the year 2023, citing support from ongoing reforms aligned with the Vision 2030 initiative – a comprehensive plan developed by the Saudi government to diversify the nation’s economy.
While the kingdom has adjusted its 2023 growth forecast and is expected to post a budget deficit instead of the previously projected surplus, it has concurrently increased its spending targets. This fiscal strategy is aimed at bolstering the non-oil growth forecast, which now stands at 5.9% for the current year.
Despite the favorable domestic demand trends, the PMI report also revealed that sales to foreign customers experienced a second consecutive month of contraction. Nevertheless, business confidence concerning increased output over the forthcoming 12 months remained positive, driven by optimism stemming from improved market conditions and higher sales prospects.
The recent uptick in non-oil business activity in Saudi Arabia, as indicated by the PMI report, offers a glimmer of hope for the nation’s economic prospects. While challenges persist, the resilience and adaptability of the Kingdom’s economy, coupled with ongoing reform efforts, are positioned to drive growth and stability in the coming months.