Economic conditions in Saudi Arabia continued to strengthen in February, according to the latest PMI survey data, despite output and new orders expanding at weaker rates.
The headline seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index™ (PMI) posted at 53.9 in February, to indicate a solid improvement in the health of the non-oil private sector economy in the kingdom.
PMI is a single-digit monitor for the performance of the non-oil private sector. It is derived from indicators of new orders, production, employment, suppliers' delivery times and stocks of purchases. Any reading greater than 50.0 points signals an overall improvement in the sector.
Saudi Arabia’s private sector output increased solidly during February, which surveyed firms largely attributed to stronger client demand. However, the rate of growth softened for the first time since activity began to rise last September. Likewise, firms saw higher inflows of new work, but the expansion slowed since the start of 2021.
Sales were driven higher by improved business confidence and efforts to maintain competitive pricing strategies.
“The economic recovery in Saudi Arabia’s non-oil private sector lost some momentum in February, with the PMI dropping to 53.9 to signal the softest rate of improvement in four months. Nevertheless, the sector remained broadly on the right track, with new business inflows and export sales continuing to rise whilst firms also built inventories in anticipation of stronger future growth,” said IHS Markit economist David Owen.
Owen went on to point out that confidence data indicate that companies expect a difficult start to 2021 with some countries still experiencing lockdown measures to curb the spread of the coronavirus pandemic.
The introduction of coronavirus vaccines around the world, however, would lead to a sharp improvement in economic activity during the last half of the year, noted Owen.
Saudi analyst Hamad al-Olayan pointed out that the recovery in performance and positive indicators is driven by the growth of sales and improvement in corporate confidence coupled with a constant decline in the pandemic’s impact.
Al-Olayan pointed out that at the level of employment, production and demand, Saudi Arabia witnessed a noticeable improvement that is expected to continue over coming months.