Saudi Arabia’s non-oil private sector managed to regain its strength in February, as improved business confidence and customer demand led to faster expansions in production, new business and purchases.
Cost inflation pressures eased for the second month in a row, while expectations for future production rose to their highest levels since the beginning of 2021.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers' Index (PMI) rose to 56.2 in February from 53.2 in January, marking the first increase since last September.
According to the index, the improvement was driven by a spurt in new business growth after concerns about the Omicron variant led to a slowdown at the beginning of the year.
Overall sales picked up at the quickest rate since last November, despite a further slight fall in export demand, while activity growth moved closer to the peak levels seen towards the end of 2021.
New orders grew at the fastest rate in three months after dropping to the slowest rate of expansion in 15 months in January. Export orders, however, declined for a second month, due to greater competition in foreign markets, while the Omicron wave continued to curb demand in some places.
“The latest PMI figures confirmed that the impact of the Omicron wave on the non-oil economy was only mild,” said David Owen, economist at survey compiler IHS Markit.
He added: “Signs of improving market conditions meant that business optimism was at its highest since January 2021, as firms expect demand growth to remain robust and the impact of the pandemic to subside. Reflecting this optimism, companies raised purchasing activity at the fastest rate since May 2019, aided by a strong improvement in supply chain performance.”
