Saudi Arabia’s Non-Oil Private Sector Thrives in November
In a show of robust momentum, Saudi Arabia’s non-oil private sector ended November on a high note, with business activity expanding at its fastest pace since July 2023, according to the latest business survey.
Surge in Business Activity
The Riyad Bank Saudi Arabia Purchasing Managers’ Index climbed to 59.0 in November from 56.9 in October, marking the fourth consecutive monthly increase. This surge was fueled by accelerated growth in new orders, purchasing activity, and staff recruitment.
Improvement in Operating Conditions
The headline PMI, calculated from sub-indices covering new orders, output, employment, supplier delivery times, and stock levels, showcased a substantial improvement in operating conditions. All five components contributed to the uptick.
Economic Diversification Success
Naif Al-Ghaith, chief economist at Riyad Bank, highlighted the strong growth in Saudi Arabia’s non-oil private sector, attributing the PMI jump to the success of economic diversification efforts. He emphasized the capacity of non-oil sectors to drive economic activity independently of oil price fluctuations.
Sharp Rise in Business Activity
Business activity saw its sharpest rise in 16 months, driven by stronger demand, higher customer volumes, and successful marketing campaigns. Employment growth surged as companies expanded their workforce at the second-fastest pace in over a decade.
Inflationary Pressures
The rapid expansion in the sector brought inflationary pressures to the forefront, with input costs rising at the sharpest pace in over four years. Wage inflation hit a ten-year high, prompting firms to raise selling prices to counter these pressures.
Optimism for Future Growth
The strong November PMI reflects the resilience of Saudi Arabia’s non-oil economy amid global uncertainties. Companies remain optimistic about future growth, supported by government initiatives under Vision 2030 to diversify the economy.
Maintaining this momentum is crucial for achieving Vision 2030 goals and ensuring long-term economic growth, according to Al-Ghaith.