The non-oil private sector in Saudi Arabia is growing at the fastest pace in 4 months
The non-oil private sector witnessed Saudi Arabiasignificant growth in the month of June, recording its highest level in 4 months, as the purchasing managers index rose to 53.3 points from 52.8 points, driven by an increase in domestic demand and new orders.
The purchasing managers index issued by "Riyad Bank"issued today, reached its highest level since last February, confirming a significant improvement in operating conditions by the end of the second quarter.
Increasing production and demand for projects
Production remained strong, with about 18% of companies surveyed reporting increased production, compared to only 2% indicating a decrease. The growth was driven by project approvals, increased customer demand, and a rebound in sales activity after previous postponements.
New business volumes recorded their strongest growth since February, accelerating at a sharp pace. Companies cited a rebound in investor confidence and domestic consumer spending, partly linked to improving conditions regarding regional disputes.
Decline in new orders from foreign customers
However, this domestic recovery contrasts with ongoing weakness in Exports. New orders from foreign customers fell sharply for the fourth month in a row, with survey respondents citing continued regional logistics challenges and intensifying foreign competition.
A mood of optimism prevailed significantly among non-oil companies, as the future production index reached its highest level since January. The companies expressed their hope that the expected improvements would contribute to Market conditions and regional peace agreements help resolve supply chain disruptions.
Employment rates stabilize
Despite rising confidence and demand, employment levels remained broadly flat in June, reflecting concerns about business expenses. Purchasing activity also remained weak, with only slight growth in purchasing volumes and inventory accumulation, as companies reported adequate inventory levels. Backlogs fell for the first time in a year.
Delivery times improved
According to the report, price pressures remained acute in June, recording the highest rate of cost inflation in 15 years.
In response, companies raised product prices at the second fastest pace in nearly six years, with 22% of companies increasing their prices compared to 8% reducing them.
In a related context, supply chain conditions showed signs of recovery. Supplier delivery times improved at the fastest pace since February, with companies shifting towards local sourcing strategies and alternative supply routes.
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