Saudi PMI falls to 56.3 points in July

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The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI), formerly S&P Global Saudi Arabia PMI, fell to 56.3 points in July.

The latest reading indicated a strong improvement in business conditions compared to the previous month, supported by growth in output, new orders, purchasing activity, and employment.

Saudi Arabia’s non-oil private sector companies saw a robust expansion in output during July, fueled by ongoing projects and a steady flow of new orders. However, this month’s expansion slowed to its weakest pace in three and a half years.

The report also noted growing demand levels, which corporates generally attributed to favorable domestic market conditions and increased efforts by sales teams to fulfill orders.

Nonetheless, signs of rising competition and a shrinking customer base began to weigh on growth. Companies reported challenges in attracting new foreign clients, resulting in a decline in new export orders for the first time in nine months.

Input cost pressures remained elevated across the Kingdom’s non-oil private sector in July, despite a slight easing in the inflation rate compared to the Q2 average. This was largely driven by another sharp increase in wage expenses, as companies sought to retain staff and offer bonuses.

In response to growing activity and stronger demand, firms expanded their workforce in July. The report recorded a sharp, historical-high surge in employment, following the steepest rise in over 14 years that had been posted in June.

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