Saudi Arabia's Non-Oil Private Sector Growth Moderates but Remains Resilient

Alanbatnews -

Saudi Arabia's non-oil private sector experienced a slight slowdown in its growth momentum during February. The Riyad Bank Purchasing Managers’ Index registered 56.1, a decrease from 56.3 in January.

Despite this moderation, the sector demonstrates significant resilience, firmly remaining in expansion territory, comfortably above the 50-point neutral mark.

Dr. Naif Al-Ghaith, Senior Economist at Riyad Bank, affirmed that the Kingdom's non-oil private sector "continued its expansionary path." He attributed the overall performance to "strong domestic demand and a continuous flow of approvals for new projects."

The sector has remained firmly in growth territory, supported by increased international sales and an improved volume of new orders for seven consecutive months. February's results indicate "a strong economy but one that is moving towards a more sustainable balance," according to Al-Ghaith.

This activity has impacted the labor market, with February seeing a significant increase in employment to cope with workloads and new business flows. The rate of employment growth reached its highest level in four months.

However, this expansion, coupled with the need to retain skilled technical and sales staff, led to the highest rate of wage cost inflation since the study began in August 2009.

Regarding prices, accelerating wage costs prompted companies to raise selling prices for their products and services sharply during February, the fastest increase since May 2023.

Supply chains saw delivery times improve at the fastest rate in nine months, thanks to increased coordination and operational efficiency, despite accelerating purchases of production inputs by companies. Looking ahead, companies remain optimistic about the next twelve months, relying on continued customer projects and improved domestic economic conditions.