Saudi's non-oil economy remains strong, but business confidence at 3-month low
Business conditions in Saudi Arabia’s non-oil economy remained strong in April, but confidence worsened amidst concerns over inflation, the war in Ukraine and renewed COVID-19 restrictions in Asia, according to a new survey.
The headline seasonally adjusted S&P Global Saudi Arabia Purchasing Managers’ Index (PMI) dipped to a three-month low at 55.7, compared to 56.8 in March.
However, S&P said its latest study still indicates a “strong improvement in non-oil private sector business conditions” in the kingdom, citing that the PMI reading is “firmly above” the 50.0 neutral mark.
Purchasing activity and inventories in Saudi Arabia also rose at the sharpest rate since December 2017, as businesses looked to meet demand and expand inventories amid rising material costs, while job creation accelerated at its fastest pace since June 2021.
“The Saudi Arabia PMI signaled another strong improvement in the health of the non-oil sector in April, but one that also showed the first signs of price pressures swaying clients’ spending decisions,” said David Owen, Economist at S&P Global.
“Business confidence in future activity levels was down to a three-month low and one of the lowest ever recorded, indicating a marked degree of uncertainty over whether the current rate of output growth can be sustained.”
Respondents polled for the survey noted that some clients are wary of volatile prices and increased economic uncertainty.
“There was a degree of hesitancy from some clients in the wake of volatile global prices and increased economic uncertainty,” S&P said.
“Notably, the latest data pointed to a solid, albeit less severe rise in average input costs as rising energy prices and supply shortages due to the war in Ukraine impacted raw material prices.”
