Underpinned by strong gains in both output and new orders, Saudi Arabia's non-oil private sector economy expanded in September, albeit at a slower pace as job creation softened and operating costs rose amid inflation, a survey of businesses showed on Tuesday.
The seasonally adjusted S&P Global Saudi Arabia Purchasing Managers' Index (PMI) was at 56.6 in for the month, down from 57.7 in August. Readings above 50.0 indicate expansion in activity.
"Albeit down on August, Saudi Arabia's non-oil private sector economy retained an impressive pace of growth during September, especially against the backdrop of increasingly challenging global economic conditions, said David Owen, Economist at S&P Global Market Intelligence.
Two of the key components of the PMI, output and new orders, remained firmly inside positive territory during September, again expanding at strong rates. Confidence in the quality of goods and services provided meant “firms expect to successfully convert into hard contract wins a high proportion of what is an extremely positive pipeline of new business," said Owen.
Purchasing activity also rose keeping pace with production and demand requirements, although easing to its softest since November 2021.
Jobs expanded too, although growth was only marginal and the weakest in the current six-month sequence, the report said.
Firms, responding to higher operating costs increased output prices, albeit modestly, while ensuring they continued to be competitive in the marketplace.
"Moreover, with costs rising at a broadly average rate, combined with a keenness amongst non-oil companies to maintain competitive pricing policies, inflationary pressures presently appear to be contained. Indeed, the latest survey showed output prices rising at a rate broadly in line with trend in September," said Owen.
The firms participating in the survey were confident that production will continue to increase over the next 12 months. However, sentiment was a little lower and down to its weakest since May.
(Reporting by Brinda Darasha; editing by Seban Scaria)