Saudi Arabia’s non-oil economy marked robust expansion in June as new businesses rose at the sharpest rate in eight months. However, intensifying cost pressures led companies to mark up their prices as the rate of input cost inflation accelerated to a 22-month peak, according to a new business survey.
The headline seasonally adjusted S&P Global Saudi Arabia Purchasing Managers’ Index (PMI) posted further above the 50.0 neutral mark in June, rising to 57.0 from 55.7 in May. The reading was the highest seen since October 2021.
Business conditions were strengthened by an even sharper rise in new order inflows. The rate of sales growth picked up for the second month running and, like the headline PMI, signalled the strongest upturn since October last year.
David Owen, Economist at S&P Global Market Intelligence, said: "Saudi Arabia's non-oil economy continued to go from strength to strength in June, with the PMI picking up to an eight-month high of 57.0 and posting well above the 50.0 no-change mark. The upturn was underlined by a robust increase in new business levels, which encouraged firms to expand their output sharply and make greater input purchases."
However, input price pressures in the Saudi Arabian non-oil economy picked up for the second consecutive month on rise in raw material and fuel prices due to constraints in global supply, while wage costs increased slightly.
Cost inflation was up to its highest level for almost two years, prompting a further uptick in average prices charged, said Owen.
Meanwhile, non-oil businesses showed a greater degree of optimism for future activity in June, as confidence rose to the strongest level since the start of 2021. The positive outlook made them add jobs and build stocks to face any supply shortfalls.
(Writing by Brinda Darasha; editing by Seban Scaria )