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PMI data shows that growth in Saudi Arabia's private non-oil sector accelerated in May.

A survey released on Tuesday showed that the expansion of Saudi Arabia's private non-oil sector activity accelerated in May. This was due to an increase in new orders and a boost in business confidence.

The seasonally-adjusted Riyad Bank Saudi Arabia Purchasing Managers' Index rose from 55.6 to 55.8 by May, firmly in the growth zone even though it is still below the peak level of 60.5 at the start of the year.

In May, new order volumes recovered strongly from an eight-month low reached in April. This was due to a combination of increased demand, a strong sales performance and new marketing campaigns. Export orders also increased, although at the slower pace than in previous months.

The subindex for new orders jumped from 58.6 in April to 62.5 readings in May.

The pace of growth in output has slowed to its lowest level since September 2024.

According to the survey, the construction industry led both in terms of activity and the number of new businesses.

Naif Al Ghaith is the chief economist at Riyad Bank. He said that domestically, firms have increased hiring in order to meet rising output requirements. Meanwhile, purchasing activity has seen its highest growth since March 2024. This was supported by faster vendor delivery times, and a more flexible supply chain.

The increase in raw material supplier fees was the main reason for the sharp rise in input prices. However, firms were forced to lower their prices by competitive pressures, especially in the service sector, despite increased costs.

As companies cited improved demand conditions and expansion plans, the degree of optimism among respondents reached an 18-month peak. Toby Chopra, Toby Chopra (Reporting)

(source: Reuters)