Saudi Arabia’s non-oil new business growth at seven-year high in September
Saudi Arabia’s non-oil private sector grew in September, with new orders rising at the fastest rate in seven years, a business survey showed, as a relaxation of COVID-19 restrictions on activity and travel boosted customer demand.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) surged to 58.6 in September from 54.1 in August, well above the 50 mark that separates growth from contraction.
The 4.5 point gain signaled the strongest improvement in non-oil business conditions since August 2015.
Firms expanded output at the sharpest rate since May and new orders received by non-oil companies jumped, with the respective sub-index rising by almost 10 points month on month.
“After two successive falls, the latest reading showed that the economic recovery has stamina, and the relaxation of pandemic measures will release new waves of demand,” said David Owen, economist at IHS Markit.
Saudi Arabia, the largest Arab economy and the world’s biggest oil exporter, expects 2.6 percent economic growth this year and 7.5 percent growth in 2022, after a 4.1 percent contraction last year caused by the coronavirus crisis and record-low oil prices.
Private sector growth is a core aspect of Crown Prince Mohammed bin Salman’s Vision 2030, a plan to transform the economy and make it less reliant on oil.
But despite the jump in new orders, the rate of job creation remained subdued in September, with surveyed firms reporting sufficient capacity levels.
“Demand pressures and rising business optimism should lead more firms to hire staff over the final quarter of the year,” Owen said.