Riyadh - Sharikat Mubasher: Saudi Arabia saw a slowdown across the domestic non-oil private sector economy in February, with the Purchasing Managers’ Index (PMI) declining to 56.1, its lowest level in nine months, down slightly from 56.3 in January.
The latest survey by Riyad Bank and S&P Global stated that overall business conditions remained strong, with the index well above its 50.0 neutral threshold.
Businesses experienced robust demand and output growth, which supported the labor market and led to the sharpest increase in wage costs in the survey's history. Despite falling to a six-month low, the rate of output growth across the non-oil sector remained substantial in February.
The PMI data continued to signal a robust increase in staff numbers across the non-oil private sector, with the rate of employment growth quickening to a four-month high and was among the strongest recorded in the series.
Additionally, Order books expanded in February, driven by the rising domestic sales. The survey suggested that supportive government policies, improved customer spending, increased sales and marketing efforts, digital business development, and collaborative projects with clients had all boosted new work volumes.
Naif Al-Ghaith, Chief Economist at Riyad Bank, commented: “Overall, February’s results point to an economy that remains strong but is moving onto a more sustainable balance. Growth has moderated, yet demand and hiring activity continue to anchor the expansion. The broader trend remains positive, with businesses actively adjusting their capacity while maintaining a high degree of confidence in underlying market conditions.”
The PMI index is compiled from responses to questionnaires sent to purchasing managers in a panel of around 400 private sector companies. It is a weighted average of the following five indices: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stocks of Purchases (10%).
