Riyadh – Mubasher: The headline seasonally adjusted Purchasing Managers’ Index (PMI) of Saudi Arabia withered a decline from 57 last April to 56.4 in May 2024, according to Riyad Bank’s latest data.

The reading, which was the second-lowest for 22 months, highlighted another sharp month-on-month (MoM) upturn in operating conditions within the Saudi non-oil private sector.

Firms reported increasing business activity due to strong demand conditions and efforts to fulfil pending workloads, although the upturn in sales was the least marked in just over two years.

Additionally, new orders placed at non-oil businesses hiked during May. However, some companies faced slowing market conditions and difficulties gaining new customers due to high competition.

Non-oil private sector firms increased their employment levels in May, offsetting the first decline in more than two years in April.

Staffing growth was mainly driven by higher workloads and efforts to lower outstanding orders.

Naif Al Ghaith, Chief Economist at Riyad Bank, commented: “This growth has necessitated an increase in employment to meet the growing demand for goods and services. However, the surge in demand has also led to price pressures impacting input prices and staff costs, although the increase in output prices has been observed at a slower pace.”

“The rise in inventory levels and prices has prompted firms to adjust their purchasing behaviors to align with their sales strategies. This cautious approach indicates a strategic response to the changing market dynamics and the need to maintain a sustainable business model,” Al Ghaith highlighted.

He elaborated: “These adjustments in procurement decisions highlight the importance of adaptability and flexibility in navigating the evolving economic landscape.”

“It is anticipated that the non-oil GDP growth will exceed 3%, driven by ongoing efforts to diversify the economy in line with Vision 2030,” the economist underlined.