Riyadh – Mubasher: The headline seasonally adjusted Purchasing Managers’ Index (PMI) of Saudi Arabia dropped to 56.9 in December 2022 from 58.5 last November, according to Riyad Bank’s data.

The PMI, which was above the 50 mark, highlighted a sharp improvement in business conditions across the non-oil private sector during December. This was attributed to powerful market demand and new business projects.

Furthermore, output charges increased to the greatest extent since March 2022, in spite of lower cost inflation.

The upturn led to a surge in employment, which was the strongest witnessed in nearly five years since January 2018, whereas stockpiling efforts slowed amid hiking purchase prices.

In this regard, Saudi companies enlarged the number of their staff last December amid growing sales in order to bolster operating efficiency. 

Naif Al Ghaith, Chief Economist at Riyad Bank, said: "We see operating conditions remaining favourable in December, characterised by rapid growth in the non-oil activities and a robust labour market by the end of 2022, with both jobs and wages having far more momentum than previously thought.”

Al Ghaith noted: "The increase in interest rates has been offset by the rapid growth which is expected to be near 9% for 2022. This significant growth pushed prices even further in the service sector, pointing to an inflationary pressure caused by the demand side, especially in the service sector, that is shadowing the input cost.”

“Prices, however, are expected to ease in the upcoming year with the anticipated drop in international prices caused by the high interest rate and recovered supply chains,” the Chief Economist elaborated.

He concluded: "All in all, December data points to a continuous growth for the fourth quarter with optimism on the upcoming year. This made us comfortability project growth of non-oil GDP to exceed 4% in 2023."