Saudi Arabia’s non-oil private sector saw strong growth in June, supported by increased customer demand and higher production, according to Riyad Bank’s Purchasing Managers’ Index (PMI).
The PMI reached 57.2 in June, up from 55.8 in May, marking the highest reading in three months and indicating a robust economic expansion in the sector, as reported by Riyad Bank. New business orders climbed, largely due to new clients and effective marketing, with domestic sales leading the surge. Export sales also saw a slight rise.
Employment in the sector grew at its fastest rate since May 2011, as companies hired more workers to keep up with orders. This led to a record increase in wage costs, driving overall expenses higher. Companies responded by raising their selling prices in June, the biggest jump since late 2023, mainly to offset increased operating costs.
Purchasing activity also accelerated, with firms buying more inputs at the quickest rate in two years. Although production growth slowed to a ten-month low, businesses remained optimistic about the future. Confidence among non-oil firms reached a two-year high, supported by steady demand and improved supply conditions.
Dr. Naif Alghaith, Chief Economist at Riyad Bank, noted that optimism is strong, driven by healthy order levels and a resilient economy. However, he also pointed out that rising wage and purchasing costs, influenced by demand and geopolitical factors, are adding pressure. Despite these challenges, companies managed to pass higher costs on to customers, reflecting improved pricing power.
