Saudi PMI advances to 52.8 pts in May

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The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI), formerly S&P Global Saudi Arabia PMI, rose to 52.8 points in May, up 2.5%, signaling a notable improvement in business conditions.

Non-oil private-sector companies showed further improvement last month, with the PMI signaling a sharp rise in output, supported by improved domestic demand and stable supply chains.

However, new order growth remained modest amid another steep contraction in exports, whilst business optimism was subdued.

Elevated input costs kept output prices rising sharply, although overall inflationary pressures eased slightly from April.

According to the report, the index remained much weaker than its long-run average of 56.8, as some survey responses indicated that ongoing regional geopolitical tensions had restrained growth.

Non-oil private sector activity expanded at its fastest pace in three months in May, signaling a solid recovery from March’s downturn.

Firms attributed the rebound to normalizing working conditions after earlier conflict-related disruptions, the revival of suspended contracts and stronger domestic demand.

Overall, new orders increased, but the pace of expansion was modest and well below the long-run trend, with improved economic conditions and restarted projects offset by delayed client spending and strong competitive pressures.

External demand also remained weak, as new export orders declined sharply for a third consecutive month, weighed down by shipping disruptions, higher freight and fuel costs, and geopolitical tensions.

*Change on a monthly basis.

The PMI is a weighted average of the following five indices: