Saudi Arabia’s Non-Oil Private Sector Surges to Six-Month High in Business Activity

As the first quarter of 2024 drew to a close, Saudi Arabia’s non-oil private sector witnessed a remarkable upswing, signaling a substantial improvement in business conditions and economic activity.

Key Highlights:

1. Sharp Expansion in Business Activity: The non-oil private sector experienced its most significant growth rate in six months, with companies reporting notable increases in both orders and new customers. This surge in business activity propelled the sector forward, fostering optimism and confidence among businesses.
2. Accelerated Purchasing Growth: The rapid improvement in business conditions prompted an accelerated rate of purchasing growth, as companies sought to meet rising demand. Additionally, there was a further decrease in cost pressures, particularly in wages, contributing to overall economic stability.
3. Steady Performance in PMI: Despite a slight drop from February, the Purchasing Managers’ Index (PMI) remained significantly above the neutral 50-point mark at 57 points in March. This indicates sustained growth and positive momentum across the non-oil private sector economy.
4. Expansion in Production and New Orders: Production levels in non-oil companies saw significant expansion in March, marking the strongest increase in six months. Similarly, the volume of new orders surged sharply, with foreign demand experiencing continuous monthly growth since mid-2023.
5. Optimistic Outlook: Non-oil companies are optimistic about future demand conditions, with the outlook for the next 12 months being the most positive since November. This optimism translated into a moderate rise in the employment rate, signaling confidence in sustained growth.

Implications for the Economy:

The robust performance of Saudi Arabia’s non-oil private sector underscores the resilience and diversification efforts of the economy. As the country continues to prioritize economic reform and investment in key sectors, such as manufacturing and services, it is poised for sustained growth and development.

Conclusion:

The surge in business activity and positive outlook for the non-oil private sector bode well for Saudi Arabia’s economic trajectory. With a steady expansion in production, rising demand, and favorable business conditions, the Kingdom is on track to maintain its position as a leading economic powerhouse in the region.