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A weakening in operating conditions saw Saudi Arabia’s Purchasing Managers’ Index (PMI) dip once again in February, a trajectory that has continued since reaching one of its highest levels in over a decade last October.
The Riyad Bank Saudi Arabia PMI dipped to 56.1 last month from 56.3 in January, indicating a slowdown across the domestic non-oil private sector economy.
The rate of output growth fell to a six-month low in February, with some reports indicating that competitive pressures across markets weighed on growth.
Naif Al-Ghaith, Chief Economist at Riyad Bank, said that despite a moderation in momentum, the sector remains in “growth territory”, supported by seven months of “rising international sales and an improving volume of new orders.”
While increased sales volumes and a build-up of outstanding orders led to increased hiring, a strengthening in the labour market also led to the sharpest increase in wage costs, which also resulted in rising business selling charges.
An expansion in order books was evident last month and firms linked this to improved customer spending.
According to analysts, the ongoing Iran conflict in the region could have an impact on growth. However, business expectations for the next 12 months remain positive.
(Writing by Bindu Rai, editing by Seban Scaria)
