Saudi Private Sector Grows to Highest Level in 6 Months

People are seen at an employment forum in Saudi Arabia. (SPA)
People are seen at an employment forum in Saudi Arabia. (SPA)
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Saudi Private Sector Grows to Highest Level in 6 Months

People are seen at an employment forum in Saudi Arabia. (SPA)
People are seen at an employment forum in Saudi Arabia. (SPA)

Saudi Arabia’s non-oil private sector expanded for the third consecutive month in October, driven by a surge in new orders - their highest levels since March - and a substantial rise in sales, which significantly boosted business activity.

The Riyad Bank Purchasing Managers’ Index (PMI) increased from 56.3 in September to 56.9 in October, reflecting improved operating conditions and economic momentum. This growth was attributed to robust sales in October, as companies reported strong customer demand and overall favorable economic conditions.

Consequently, businesses experienced an expansion in commercial activity and maintained a positive outlook for future growth. Additionally, purchasing of production inputs accelerated after reaching a three-year low in September, though it remained moderate compared to early-year levels, with companies noting sufficient inventory levels.

The report highlighted, however, that the strong sector-wide improvement was accompanied by increased cost pressures in materials and staffing, resulting in the first rise in average prices for goods and services in four months.

Dr. Naif Al-Ghaith, Chief Economist at Riyad Bank, told Asharq Al-Awsat that the robust economic performance was driven by a notable rise in sales, contributing to expansions in employment, procurement, and inventory.

The accelerated pace of input purchases in September, the fastest in three years, reflects a continued expansionary trend since September 2020, driven by rising demand, he stressed

The significant increase in new orders in October underscores the success of Vision 2030’s strategic emphasis on innovation and infrastructure development, he added.

More than 40% of surveyed companies reported increased demand, driven by strong local customer interest, creative marketing strategies, and sustained investments in infrastructure, demonstrating the resilience of Saudi Arabia’s economy and reinforcing its position as a leading non-oil economy in the region.

He noted that these gains align with the non-oil GDP growth rate of 4.2% in the third quarter, indicating a positive economic shift as the country seeks to diversify income sources away from oil, contributing to Vision 2030’s goals of building a sustainable economy capable of meeting future challenges.

Al-Ghaith projected that the non-oil sector’s contribution to GDP would exceed 52%, with growth surpassing 4% this year.



AI Borrowing Binge Rattles US Markets

Tech giants are raising debt to finance the construction of data centers that power AI. Brandon Bell / GETTY IMAGES NORTH AMERICA/AFP
Tech giants are raising debt to finance the construction of data centers that power AI. Brandon Bell / GETTY IMAGES NORTH AMERICA/AFP
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AI Borrowing Binge Rattles US Markets

Tech giants are raising debt to finance the construction of data centers that power AI. Brandon Bell / GETTY IMAGES NORTH AMERICA/AFP
Tech giants are raising debt to finance the construction of data centers that power AI. Brandon Bell / GETTY IMAGES NORTH AMERICA/AFP

The world's richest companies can no longer rely on their massive cash piles alone to stay in the artificial intelligence race and have suddenly started borrowing massively in a shift that is sending repercussions across the world.

Rising US interest rates, including on the Treasury bonds that anchor the global economy, are sending tremors through the financial world, and some analysts point to the AI borrowing bonanza as one of the culprits, said AFP.

From next to nothing in 2024, tech sector borrowing has reached around $500 billion in the nine months since January, as Google, Meta, Amazon, Microsoft and others raise debt hand over fist to finance the chips, servers and data centers that power AI.

Goldman Sachs expects a further ramp-up in 2027, to $1.2 trillion.

"This is not something that we've seen before," said Chris Della Fave, senior vice president at fundraising advisory firm Post Oak Group, who estimates that AI now accounts for 25 percent of all corporate bond issuance, up from 4 percent two years ago.

In inflation-adjusted terms, the AI sector is expected to borrow more this year than US cable operators did to build out the entire internet, or than railroad companies did during the 19th-century US rail boom.

So far, investors have eagerly snapped up the chance to lend to the tech giants, but they have demanded returns that would have been unthinkable for such blue-chip companies not long ago.

Even Meta has had to offer more than 7 percent a year, while riskier cloud data center specialists have gone above 9 percent.

The impact reaches well beyond the companies building AI -- their debt is even starting to crowd out demand for the US government bonds that anchor the financial system.

An investor who might otherwise buy a US Treasury bond "might decide to buy Microsoft" instead, said Mark Malek, chief investment officer at Siebert Financial, referring to the tech giant's bonds.

That shift pushes up the rates Washington pays to borrow, he explained.

This adds to the other force driving up US borrowing costs: inflation, fueled by the war against Iran and high energy prices.

The interest rate on 10-year US government bonds -- Wall Street's benchmark and widely seen as the most important number in global finance, setting the tone for everything from mortgages to car loans -- is now above 5.30 percent, its highest level since 2002.

- 'Sharper correction' -

Adding to the volatility, hedge funds had piled into US government bonds like never before, holding 7 percent of all those in circulation at the end of 2025, though that share has since fallen.

Hedge funds, which place big bets on markets, move their money far faster than more cautious investors such as insurers and pension funds.

Even if the war and the oil situation stabilized, Della Fave said, "I wouldn't expect the yields to dramatically reduce, to be honest, because of this influence of the AI debt situation."

Beyond the rising cost of borrowing, some are questioning the risks of betting on an AI boom that could hit a wall, as the dot-com bubble did in 2000.

Even a moderate slowdown in the frenzied pace of construction, delays on certain projects or weaker-than-expected revenue growth could trigger a shock in financial markets, Malek warned.

In late September, the Bank of England's Financial Policy Committee warned that "the risk of a sharper correction persists," particularly if concerns about the pace of AI development or adoption hit earnings expectations.

In July, amid some second-guessing about the AI boom, the tech-heavy Nasdaq index fell nearly 7 percent.

Against this backdrop, cloud specialist Oracle is sometimes seen as a bellwether.

With massive debt ($125 billion), cash reserves that shrink every quarter and a possible delay on a huge data center project in New Mexico, several warning lights are flashing for Larry Ellison's group.

"Let's say Oracle has a problem... They can't pay for something," Malek said. Trouble with its debt "could trigger contagion" across AI finance as a whole, he added.


Gold Inches Lower as Firmer Dollar, Higher Yields Weigh

A woman passes in front of a gold shop in Hong Kong (AFP)
A woman passes in front of a gold shop in Hong Kong (AFP)
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Gold Inches Lower as Firmer Dollar, Higher Yields Weigh

A woman passes in front of a gold shop in Hong Kong (AFP)
A woman passes in front of a gold shop in Hong Kong (AFP)

Gold eased on Tuesday, pressured by a firmer US dollar and rising Treasury yields, though losses were limited by easing expectations of a Federal Reserve interest rate hike this month.

Spot gold slipped 0.3% to $4,128.69 per ounce by 0155 GMT. US gold futures were little changed at $4,156.00.

The dollar held firm, making greenback-denominated commodities more expensive for holders of other ‌currencies, Reuters said.

The 10- ‌and 30-year Treasury yields hit 24-year ‌highs ⁠on Monday as persistent ⁠bond market weakness weighed on sentiment.

"Fundamentals remain supportive of gold in the long term. The next big catalyst is likely to stem from geopolitical risk in the Middle East," said Kyle Rodda, senior financial market analyst at Capital.com.

"Alternatively, a significant change in US rate expectations could provide an ⁠impetus for the next break-out, so every ‌piece of price data will ‌be important."

Expectations of a US rate hike in October eased ‌after data on Friday showed US job growth slowed ‌more than expected in September and nonfarm payrolls for the prior two months were revised lower.

Traders are still pricing an 87% probability of an increase in December, according to CME's FedWatch Tool.

Higher ‌interest rates increase the opportunity cost of holding non-yielding gold.

Data showed US services sector activity ⁠slowed ⁠in September, while strong domestic demand stretched supply chains and pushed a measure of prices paid by businesses for inputs to its highest level in more than four years, suggesting inflation could remain elevated into 2027.

Elsewhere, Yemeni government forces staged a lightning advance to retake the coast around the Bab el-Mandeb Strait up to the city of Mocha, the government said, pushing the Iran-backed Houthis out of most of the areas they seized last month.

Among other metals, spot silver fell 0.6% to $60.67, platinum lost 0.7% to $1,710.08 and palladium eased 0.2% to $1,170.15.


Oil Stocks in US Strategic Petroleum Reserve Fall to Lowest Level since 1982

Crude oil, gasoline, and diesel storage tanks at Kinder Morgan's facility in Los Angeles (Reuters)
Crude oil, gasoline, and diesel storage tanks at Kinder Morgan's facility in Los Angeles (Reuters)
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Oil Stocks in US Strategic Petroleum Reserve Fall to Lowest Level since 1982

Crude oil, gasoline, and diesel storage tanks at Kinder Morgan's facility in Los Angeles (Reuters)
Crude oil, gasoline, and diesel storage tanks at Kinder Morgan's facility in Los Angeles (Reuters)

Stocks of crude oil in the US Strategic Petroleum Reserve fell to 283 million barrels last week, the lowest level since October 1982, according to data from the Department of Energy, Reuters reported.

The drawdowns are part of a US agreement to release 172 million barrels from the facility.

Additionally, the Trump administration last week said it is offering to loan energy companies 40 million barrels of oil from the Strategic Petroleum Reserve.