The non-oil private sector in Saudi Arabia continues to grow in February

Saudi Arabia’s Non-Oil Private Sector Continues Strong Growth in February 2024 Despite Slowing Pace

Riyadh, Saudi Arabia –
A survey released today revealed that Saudi Arabia’s non-oil private sector continued its strong expansion in February 2024, driven by robust customer sales and increased activity levels, although the growth pace slowed compared to January.

Purchasing Managers’ Index (PMI) Overview
According to the seasonally adjusted Purchasing Managers’ Index (PMI) from Riyad Bank, the index stood at 58.4 in February, compared to 60.5 in the previous month, which was the highest level in ten years. Despite this slight decline, the index remains well above the 50-point threshold, indicating sustained strong growth in the sector.

New Orders and Sales Growth
The report highlighted that the slight dip in the main index was due to a slowdown in the growth of new orders, which had seen strong growth at the beginning of the year. The sub-index for new orders dropped to 65.4 in February, down from 71.1 in January. However, company sales continued to grow, supported by increased efforts in tourism and marketing. Additionally, production levels remained high, although the pace of growth slowed compared to the second half of 2023.

Employment Growth and Rising Confidence
Naif Al-Ghaith, Chief Economist at Riyad Bank, commented on the results, stating: “Despite the slowdown in new orders growth in February, companies remain confident in future demand, as evidenced by the increase in employment levels.” Employment in Saudi Arabia’s private sector rose at the fastest pace in 16 months, with companies adding staff to meet the increasing business demands. The manufacturing and services sectors experienced the highest employment growth.

Inflation and Market Competition
Although input costs continued to rise due to higher raw material prices and wages, inflation slowed slightly. Companies raised selling prices only moderately due to intense market competition, reflecting a more cautious approach to pricing in a competitive environment.

Optimism for the Future
Businesses expressed significant optimism about the future, with business confidence reaching its highest level in 15 months. This positive outlook is attributed to the ongoing growth of the Saudi economy and government initiatives supporting sustainable growth in non-oil sectors.

Sources:

• Riyad Bank Purchasing Managers’ Index Survey
• Saudi Labor Market Data
• Economic Reports from Financial Institutions