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Business conditions in Saudi Arabia’s non-oil economy continued to improve in October, with private companies reporting rising sales and trade flows, according to IHS Markit’s latest purchasing managers’ index (PMI).
Output levels in the sector rose at the sharpest pace in nearly four years during the month, driven mainly by an upturn in demand, while new export work also jumped to its highest level since May.
“October PMI data showed the non-oil sector recovering at a rapid pace. Growth in output was the strongest seen for nearly four years, driven by marked rise in client demand as the lifting of COVID-19 restrictions continued to boost economic activity,” said David Owen, economist at IHS Markit.
The headline seasonally adjusted IHS Markit Saudi Arabia PMI stood at 57.7 in October. The latest reading may be slightly down by 0.9 points from the previous month, but IHS Markit pointed out that it’s still indicative of a significant growth in sales.
It was not only the second-highest reading since the start of the pandemic, it was also above the long-run series average.
“New export work increased to the greatest extent since May, as panellists commented on improving global trade flows. Driven by rising sales, non-oil companies reported a marked expansion in output during October,” IHS Markit said.
Owen also noted that the rate of purchase cost inflation sharpened during October, indicating that higher commodity prices are feeding through to firm’s balance sheets.
“With confidence towards sales prospects running strong, businesses were able to pass on costs to customers with the quickest rise in output prices since August 2020,” Owen added.
Last October, Saudi Arabia announced it would ease COVID-19 restrictions across the kingdom, allowing commercial outlets to resume operations to full capacity.
As of last month, wearing masks and social distancing outdoors are no longer mandatory, while public areas, such as restaurants, cinemas and sports stadiums, are also allowed to operate at full capacity for fully vaccinated individuals.
(Reporting by Cleofe Maceda; editing by Seban Scaria )
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