Non-oil business activity growth in Saudi Arabia slowed in November, a survey showed on Tuesday, as rising input prices and lower export figures weighed.

The seasonally-adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index eased from 58.4 in October to 57.5 in November, but stayed well above the 50.0 neutral threshold to signal an improvement in business conditions across the kingdom's non-oil private sector economy.

The PMI is a weighted average of the following five indices: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%).

The fall in the headline index was due to moderations in the rate of staff and inventory growth, as well as a sharp reduction in delivery times.

"The Saudi PMI has shown positive signs of expansion, driven by strong sales, increased orders, and effective marketing strategies. However, the export numbers, particularly in the petrochemical sectors, have remained relatively low compared to the previous year. Additionally, while input costs have been rising, competitive pressures have limited the impact on overall prices," said Naif Al-Ghaith, chief economist at Riyad Bank.

New business inflows rose at the sharpest rate since June as firms cited new customers and greater investment spending, the report said. New Orders Index posted its highest reading in five months. New order intakes continued to rise considerably as companies highlighted improvements in market conditions, customer numbers and investment spending. The uplift came despite weakness in foreign demand, as the latest data showed new export orders declining for the third time in four months.

The survey data indicated a rise in cost inflation across the non-oil economy. Overall input costs rose at their quickest pace since June 2022, led by increased purchase prices, especially in the construction sector. Wage inflation moderated but also remained above average. Employment increased across the non-oil sector, although the rate of growth eased from October’s nine-year record.

The higher input costs led firms to raise their selling charges for the first time in three months in November.

Meanwhile, business expectations for the coming 12 months improved in November. The outlook was the strongest since June, amid broad hopes that new business inflows will remain robust and drive higher activity.

(Writing by Brinda Darasha; editing by Seban Scaria)