Riyadh – Mubasher: The headline seasonally adjusted Saudi Arabia Purchasing Managers’ Index (PMI) declined to 53.3 in March from 53.9 in February, while the country’s non-oil private sector continued to see improvement in business conditions.

The index has plunged 3.8 points at the end of the first quarter of 2021 from 57.1 in January, reflecting a slightly softer, yet still relatively solid, upturn in the non-oil private sector economy, according to the IHS Markit survey.

The New Orders Index, which is among the five components of the PMI, had the largest negative influence in March, as it marked the lowest reading since October 2020 while indicating a further slowdown in sales growth.

Several consumers reduced their spending last month due to the ongoing impact of the COVID-19 pandemic.

The Saudi non-oil private sector lost further momentum from January's recent peak as new order growth softened for the third month in a row. Businesses witnessed expansions in output and purchasing, besides stabilisation in job numbers, which aided efforts to reduce outstanding work.

The survey showed that the outlook for future activity dimmed, with companies indicating the weakest optimism for growth in nine months amid projections of caution around how fast the recovery from the pandemic would take to happen.

As some clients delayed spending due to further uncertainty about the impact of the pandemic, business output expectations weakened in March. Only 11% of the survey panel foresaw growth in 2022, while around 87% of firms expected output to remain stable.

"With strong sales growth revealed in January data, though, we should still see an improvement in business activity reflected in official data for the first quarter of 2021," Economist at IHS Markit, David Owen, said.

He added, "The pandemic and associated restrictions continued to trim new business growth, according to respondents, contributing to a more downbeat outlook for business activity over the next 12 months. This largely reflected doubts about clients’ willingness to spend as well as the short-term boost to the economy from the vaccine rollout, with some firms expecting market activity to remain subdued until the second half of the year."

Economic conditions in Saudi Arabia had strengthened in February this year, however, the growth rate eased to a four-month low as both output and new orders expanded at weaker rates.