Slowdown in new work orders impacted Saudi's non-oil business growth in July
Saudi Arabia's non-oil private sector maintained its strong performance in July thanks to favourable local economic conditions. However, overall growth has lost momentum since June, reflecting the slowest rise in new work orders over the last seven months.
At 57.7 in July, the Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) was down from 59.6 in June and the lowest since December 2022.
The latest reading was slightly above the long-run survey average (56.9) and signalled strong underlying business conditions, despite the slowdown since June. The rise in new work was the slowest for seven months, according to the PMI data.
Naif Al-Ghaith PhD, Chief Economist at Riyad Bank, said: "In terms of prices, inflationary pressures eased from June, with cost burdens rising at the softest pace since October 2022."
"This, combined with increased competition, resulted in a reduction in output charges for the first time in nearly two-and-a-half years," he added.
The fastest rates of output expansion were reported by manufacturing and construction companies.
The PMI survey respondents were upbeat on long-term business expansion plans and subsequent efforts to boost operating capacity in July. This resulted in a rise in employment numbers for the sixteenth month in a row, although the pace of hiring was the joint weakest since November 2022.
Meanwhile, business expectations for the next 12 months remained upbeat in July.
"Although the degree of optimism eased from June, businesses remained optimistic on new project spending by the government that will allow for further business expansion plans," Al-Ghaith said.
