Business activity expanded in Saudi Arabia's non-oil private sector on the back of strong demand and new customers, while costs pressures softened further. 

The seasonally-adjusted Riyad Bank Saudi Arabia Purchasing Managers' Index stood at 57.0 in March, a shade lower than 57.2 in February, but well above the 50.0-mark denoting expansion in activity. 

Output levels expanded during March, the strongest seen for six months, with most companies linking higher activity to robust new orders and strong demand conditions. 

"The positive momentum also prompted accelerated purchasing activities and additional hiring, underscoring a buoyant market outlook," said Naif Al-Ghaith, Chief Economist at Riyad Bank. 

For the second month running new orders placed rose sharply in March. Most firms saw new business volumes rise. 

Demand from foreign customers also improved, with the latest data marking the first instance of sustained month-on-month growth since mid-2023, the report said. 

The survey showed that firms were optimistic in their outlook for future demand conditions. They hired additional workers to support workloads and employment rose at a moderate pace.   

"The surge in orders and customer acquisition not only bolstered current operations but also laid the foundation for continued expansion and potential business growth in the foreseeable future," said Al-Ghaith. 

Non-oil private sector firms saw a decrease in cost inflation for the second month running. Although input prices rose overall, the rate of inflation was the slowest seen for eight months, mainly due to softening wage pressures.   

 (Reporting by Brinda Darasha; editing by Seban Scaria)