Underpinned by a strong growth in business activity that was the fastest since August 2015, Saudi Arabia's non-oil private sector economy expanded in November although inflationary pressures rose, a survey of businesses showed on Monday.
The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) rose for the second consecutive month to 58.5 for the month from 57.2 in October. The reading was also the highest seen since September 2021 and above the long-run series average of 56.8.
"The Saudi economy is continuing its expansion in the non-oil sector in November, business conditions have improved across the board in light of rising demand. Output levels have expanded at the fastest pace in seven years, driving cost pressures higher and resulting in increased prices charged to consumers," said Naif Al-Ghaith, chief economist at Riyad Bank.
New order growth accelerated to a 14-month high, leading to a sharper rise in purchasing activity, which the survey panellists attributed to improving economic conditions, rising client demand and increased investment. Exports also rose at the fastest pace since November 2015.
"As a result, output levels expanded at the strongest rate for more than seven years, with growth remaining sharp in each of the manufacturing, construction, wholesale & retail and services sectors," the report said.
However, input cost inflation saw an uptick during November with average input prices up sharply and at the quickest pace since July. Staff costs also rose after the first decrease for eight months was recorded in October. This led to an increase in output charges, as firms looked to pass through higher expenses to their customers. Output prices rose in the manufacturing, wholesale & retail and services sectors, but fell in construction
Job creation was slight, with most companies keeping staffing unchanged from the month before.
Those surveyed were optimistic regarding the outlook for the year ahead. Panellists said that rising new orders and the government's Vision 2030 initiative gave them confidence that activity will strengthen.
(Writing by Brinda Darasha; editing by Daniel Luiz)