Saudi Non-Oil Sector Sees Strongest Month Since February

Saudi Arabia’s non-oil private sector saw its strongest performance since February, with September’s Purchasing Managers’ Index (PMI) climbing to 55.3. This marks an improvement from August’s 53.8, indicating continued expansion above the 50.0 threshold. The growth was primarily driven by domestic demand, as new orders surged to their fastest pace since February, while export orders dropped for the seventh consecutive month.

Employment growth also reached a seven-month high, as firms hired more sales and technical staff, reflecting confidence in sustained local activity. However, rising costs posed challenges, with material and transportation expenses remaining high. Businesses responded by raising selling prices at the second-fastest rate in over six years, signaling regained pricing power.

Despite the positive trends, business confidence for the year ahead cooled. The Future Output Index hit its lowest point since March, with firms citing regional tensions and potential supply disruptions as concerns. Nonetheless, ongoing supports such as consumption, investment, government projects, and credit availability were noted by Riyad Bank’s chief economist Naif Al-Ghaith.

The rise in PMI to 55.3 could have implications for consumers, as firms reported one of the fastest increases in selling prices in years. This suggests potential cost-of-living pressures, as higher input costs are being passed on to customers. PMI price measures are closely watched as early indicators of inflation, capturing current business pricing trends before they appear in official consumer-price data.