The non-oil-producing private sector in Saudi Arabia witnessed a rapid expansion at the end of the first quarter of 2023.
The sector recorded a sharp rise in new business during March, which helped achieve more growth in employment and procurement, according to a new business survey.
The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) came in at 58.7 in March, dropping from a near eight-year record of 59.8 in February, but remained firmly above the 50.0 no-change mark as operating conditions improved.
The survey noted that output and new business continued to rise, supporting further growth in employment and purchases.
Some companies said a relatively moderate increase in output prices helped sales grow, while orders from foreign customers expanded again.
A continued surge in new business helped achieve a significant rise in production levels, the latest increase being slightly lower than February’s record level, according to the survey.
“Business conditions remain strongly positive at the end of the first quarter of 2023 as improving market conditions and increased development spending helped to boost demand in the non-oil private sector,” said Naif Al-Ghaith, chief economist at Riyad Bank.
He noted that the strong improvement in demand from foreign customers was due to two reasons: “First, the improvement in industrial landscape has created positive grounds for producers to diversify their production lines and compete in foreign markets, enlarging their market share. Second, the recent depreciation of the US dollar made those goods more affordable and accessible to a number of inflation-torn economies.”
Al-Ghaith added that both production and new orders witnessed a sharp expansion, which increased pressure on production capacity in non-oil-producing companies. Employment levels in all sectors rose at one of the strongest growth rates in the past five years.
The survey found that non-oil firms remained confident of a rise in activity over the next 12 months due to rise in demand and supportive government policy.
