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PMI data shows that Saudi Arabia's growth in the non-oil sectors accelerated in June due to strong demand.

A survey released on Thursday showed that the expansion of Saudi Arabia's private non-oil sector activity increased in May due to a strong client demand as well as a spike in hiring.

The Riyad Bank Saudi Arabia Purchasing Managers' Index, which is adjusted for season, rose from 55.8 in May to 57.2 this month. This puts it above the 50 point line that indicates growth.

The subindex rose to 64.3 from 62.5 in may, indicating a rapid acceleration in new order growth. This upturn was primarily driven by domestic sales, which were supported by client acquisitions that went well and improved marketing strategies. Export sales were marginally up.

"Firms have largely attributed the improvement in activity to improved sales, new projects starting, and better conditions for demand, even though the pace of growth was slower than previous highs," Naif Al Ghaith said, chief economist at Riyad Bank.

Private non-oil companies have hired more staff than ever since May 2011 as they expand their teams to handle increased workloads.

The input prices rose as well, in line with the trend of the second quarter, which led firms to pass higher costs on to their customers. The output prices rose strongly, marking the biggest increase in over a year and a half, after months of declines.

The survey revealed that despite cost pressures, Saudi firms in the non-oil sector remained confident about the future. In fact, the Future Output Index reached a record high of two years. The resilient economic conditions in Saudi Arabia and robust demand boosted confidence.

The International Monetary Fund increased its forecast of Saudi Arabia's GDP growth in 2025 to 3.5%, from 3%. This was partly due to the demand for government-led initiatives and the OPEC+ plan to gradually end oil production cuts. Hugh Lawson, Editor (Reporting)

(source: Reuters)