The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) rose to 57.2 in September from 56.6 in August, which was the lowest level since September 2022, well above the 50 level that indicates growth and again above its long-term average of 56.9.
Business confidence in future activity also improved, although growth in purchases, inventory and employment declined.
Total output rebounded from a 19-month low in August with the sub-index rising to 62.8 from 59.1 the previous month thanks to a rapid increase in new business.
The sub-index for new orders jumped four points to 64.2, but the pace of increase remained slower than its average since the beginning of the year.
For his part, Dr. said: Nayef Al-Ghaith, Senior Economist at Riyad Bank: “The non-oil economy continues to grow despite the challenges arising from the current monetary policy conditions. We see that the non-oil GDP will continue to support growth and will remain above 5.5 percent in 2023 thanks to Repairs.
According to the preliminary budget statement, Saudi Arabia reduced its growth expectations for 2023, and expected to record a budget deficit this year instead of the surplus that was previously expected.
But the government has increased its spending targets, which should support non-oil growth expectations of 5.9 percent this year.
On the other hand, the Purchasing Managers’ Index Study Group reports indicated that competitive pressures limited sales for some companies and led to a decline in selling prices for the second time in 3 months.
The overall decline in prices was modest, but it was the fastest since July 2020, and companies reduced prices despite another sharp increase in input costs due to higher prices for raw materials and increased wages amid rising costs of living.
This indicates that corporate profit margins have declined again.
Meanwhile, the latest data indicate a continued strong increase in purchasing and hiring, albeit with a slowdown in growth rates since August.
Purchasing activity rose sharply as companies indicated a further increase in input requirements. Besides, companies saw a marked improvement in supplier delivery times, leading to a sharp but slower expansion in inventory levels.
Employee numbers have also risen, and the moderate rise remains among the fastest rates recorded in the past five years. This has enabled companies to complete work in a timely manner, resulting in a significant reduction in pending work which was the fastest in a year.
Finally, production expectations rose sharply in September, except for falling to the weakest level since mid-2020 in August.
The companies looked forward to the continued improvement in market conditions and rising sales to support the expansion of activity.
Al-Ghaith explained, “Despite the increase in the prices of production inputs, commodity prices did not record the same increase, but rather declined due to strong competition. Therefore, we expect the average headline inflation rate in the Kingdom to reach 2.5 percent for the year 2023.”
He said: “External headwinds affected the exports of non-oil companies, which fell slightly in September. However, production inputs and imports continued to rise, which would impact the ratio of non-oil exports to imports to less than 31.” .
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