Businesses in Saudi Arabia’s non-oil private sector have been hiring and spending at a faster clip than usual in March, an indication that the country’s economy as a whole is on the upswing. Yet, new PMI (Purchasing Managers Index) data from Riyad Bank indicates that Saudi businesses are “struggling” to pass on price increases to customers.
In fact, sales prices only increased “marginally” in March due to intense rivalry and resistance from shoppers.
A chief economist at Riyad Bank, Naif Al-Ghaith, said that job growth had been “among the strongest observed in the preceding five years,” with an emphasis on increased staffing levels across all industries. “Business conditions remain very positive towards the end of the first quarter of 2023 as rising demand in the non-oil private sector is a direct result of strengthening market circumstances and increasing development spending. Production and new orders have increased dramatically, putting stress on the resources of non-oil businesses.
Saudi economy is showing sign of optimism in terms of growth
The new 500,000 bpd decrease from May is expected to boost oil prices, while the PMI for the Saudi economy came in at 58.7 in March, down slightly from 59.8 in February, which was the highest in over 8 years.
“Saudi non-oil enterprises showed a high degree of optimism about future activity in March, according to Al-Ghaith, despite the fact that the world is facing challenges such as the current credit crunch and increased uncertainty. Reasons for this optimism include the government’s supportive policies and rising demand.”
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