Saudi Arabia’s non-oil private sector activity grew rapidly in March with new orders boosted by lower prices and improved economic conditions, although the rate of growth slowed from January’s near 14-year high, a survey showed on Monday.
The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) edged down to 58.1 in March from 58.4 in February but remained far above the 50 mark signaling growth.
The new orders subindex slipped to 63.2 in March from February’s blistering 65.4 reading, Reuters reported.
Despite the slower momentum, businesses engaged in stockpiling, anticipating sustained sales growth.
Employment growth was driven by increased sales volumes and efforts to boost capacity. The survey data pointed to the best quarter for job creation in over 12 years.
Naif Al-Ghaith, Riyad Bank’s chief economist said that improved business conditions are supported by government efforts to enhance regulatory frameworks and infrastructure investments, paving the way for greater private and foreign investments.
Saudi Arabia’s Vision 2030 plan to diversify its economy away from hydrocarbons aims to increase the non-oil sector’s contribution to GDP to 65 percent by 2030. It is currently over 50 percent.
Input cost inflation eased to a four-year low in March, prompting companies to reduce selling prices for the first time in six months amid strong market competition.
Backlogs of work increased sharply, the fastest since August 2018, due to higher orders and constrained capacity.
The survey showed a marked softening of business activity expectations for the year ahead across the non-oil economy, however.
