Saudi Arabia’s Purchasing Managers’ Index (PMI) fell again in February due to worsening business conditions, a trend that has continued since reaching one of its highest levels in more than a decade in October last year.
Riyadh Bank Saudi Arabia PMI fell to 56.1 last month from 56.3 in January, indicating an overall slowdown in the country’s non-oil private sector economy.
Production growth in February fell to the lowest level in six months, with some reports saying competitive pressure across the market is weighing on growth.
Naif Al Ghaith, chief economist at Riyadh Bank, said the sector was still in “growth territory”, supported by a seven-month period of “increasing international sales and improving new orders”, although momentum has been modest.
While increased sales volumes and the accumulation of outstanding orders led to employment growth, the strengthening of the labor market also led to a sharp increase in wage costs and, as a result, higher business sale fees.
The growth in order volumes over the last month has been evident, and companies are linking this to improved customer spending.
Analysts say the ongoing Iranian conflict in the region could impact growth. However, business expectations for the next 12 months remain positive.
(Writing: Bindu Rai; Editing: Sevan Scalia)
bindingu.rai@lseg.com
