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Saudi Private Sector Sees Expansion in Production, Purchasing Activity

Saudi Private Sector Sees Expansion in Production, Purchasing Activity

Tuesday, 6 April, 2021 - 11:15
The Saudi production sector continues to recover from the repercussions of the Covid-19 pandemic. (Asharq Al-Awsat)

An international index revealed on Monday that the commercial conditions in the non-oil-producing private sector in Saudi Arabia continued to improve at the end of the first quarter of 2021.

According to the index, companies continued to record expansions in production and procurement and stability in the number of employees.

A press release by IHS Markit said that the headline seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) fell from 53.9 in February to 53.3 in March, indicating a slightly softer, but still relatively solid upturn in the performance of the non-oil private sector economy.

It added that the index has fallen 3.8 points from its recent peak in January, pointing that the recovery from COVID-19 has lost some momentum over the first quarter.

The report noted that business activity expanded at a slower pace in March, although the latest upturn was still sharp overall. IHS Markit quoted several firms as saying that ongoing projects and efforts to run down backlogs reinforced output. This led to a steep drop in outstanding work and the quickest since last June, according to the report.

Moreover, the report said that employment numbers were largely stable in the latest survey period, while rising output encouraged firms to expand purchasing.

Commenting on the survey, David Owen, Economist at IHS Markit, said: “March PMI data pointed to weaker growth in non-oil business conditions in Saudi Arabia, suggesting a cooling off in the economic recovery since the start of the year. With strong sales growth revealed in January data, though, we should still see an improvement in business activity reflected in official data for the first quarter of 2021.”

Owen added that the quarterly PMI average of 54.8 was the highest since the end of 2019.

“The pandemic and associated restrictions continued to trim new business growth, according to respondents, contributing to a more downbeat outlook for business activity over the next 12 months. This largely reflected doubts about clients’ willingness to spend as well as the short-term boost to the economy from the vaccine rollout, with some firms expecting market activity to remain subdued until the second half of the year,” he added.

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