Riyadh – Mubasher: Business activity in Saudi Arabia's non-oil private sector remained robust in June 2024 despite signs of softening demand, according to a report by Riyad Bank.

The headline seasonally adjusted Purchasing Managers' Index from Riyad Bank fell slightly to 55 in June from 56.40 in May but stayed well above the neutral 50 level that separates expansion from contraction.

While the index hit its lowest level since January, it showed companies continued ramping up output to fulfil existing orders and ongoing projects, Riyad Bank’s report found.

New orders - which account for 30% of the overall index - rose at their slowest pace in nearly two and a half years in June as client demand eased.

Business sentiment about future activity held relatively steady compared to May, despite the softened demand.

On the price front, input costs faced by private sector firms rose sharply in June, driven up by higher wages, materials, and technology prices. However, competitive pressures led companies to discount their own selling prices, preventing them from fully passing on those increased costs.

Employment growth also cooled last month amid tightened constraints on costs from wage inflation, according to the survey participants.

Businesses appeared keen to rein in surging stockpiles, as purchases of inputs decelerated markedly in June to their lowest rate in nearly three years. That calmer pace of restocking was still sufficient to support ongoing production expansion, the report found.

Naif Al Ghaith, PhD, Chief Economist at Riyad Bank, said: “Looking at the second quarter as a whole, the growth figures for Q2 still indicate a positive outlook for non-oil GDP in Saudi Arabia, with expectations of growth exceeding 3%.”

“The overall performance of non-oil sectors throughout the quarter continues to drive economic growth and diversification efforts in the country. The high output levels, stable supply chains, and moderate job creation point to sustained economic resilience,” Al Ghaith explained.