RIYADH: Saudi private sector output and new businesses creation saw a marked increase in March, leading to surge in staffing across all sectors and employment growth that was among the strongest seen in the past five years, an economy tracker has revealed.
The latest Riyad Bank Saudi Arabia Purchasing Managers’ Index report, formerly known as the S&P Global Saudi Arabia PMI, revealed the Kingdom’s metric hit 58.7, a strong indication that the ongoing economic diversification efforts are progressing steadily.
According to the index, PMI readings above the 50-mark show non-oil private sector growth, while those below 50 signal contraction.
“Business conditions remain strongly positive at the end of the first quarter of 2023 as improving market conditions and increased development spending helped to boost demand in the non-oil private sector,” said Naif Al-Ghaith, chief economist at Riyad Bank in the report.
The Kingdom’s PMI, however, slightly slowed down from February, when it marked an eight-year record figure of 59.8.
In January, the Kingdom’s PMI was 58.2, while in December, it stood at 56.9.
The rise in Saudi Arabia’s PMI over the past few months, which is a direct indication of robust private sector growth, has also helped the Kingdom to reduce the unemployment rate.
A new report released by the General Authority for Statistics has revealed that unemployment among Saudis is at its lowest level since records began in 1991.
The rate fell to 8 percent in the fourth quarter of 2022, from 9.9 percent in the previous three months.
For the Saudi government, job creation is a key part of the Vision 2030 economic agenda to cut the Kingdom’s decades-old reliance on oil.
The PMI survey further noted that non-oil companies in Saudi Arabia saw a sharp uplift in new business intakes in March, as improving market conditions and increased development spending helped to boost demand, while some companies opined that a relatively mild increase in output prices had supported sales growth.
“Non-oil firms continued to see a strong improvement in demand from foreign customers for two reasons. First, the improvement in industrial landscape has created positive grounds for producers to diversify their production lines and compete in foreign markets, enlarging their market share. Secondly, the recent depreciation of the US Dollar made those goods more affordable and accessible to a number of inflation-torn economies,” said Al-Ghaith.
Al-Ghaith added that supportive government policies within the Kingdom and improving demand levels are driving business optimism among non-oil firms in Saudi Arabia.
Meanwhile, input cost inflation faced by non-oil firms picked up to a four-month high in March, driven by rising costs for raw materials and staff wages.