Non-oil business activity remained strong in March 2024

Non-oil business activity remained strong in March 2024, fueled a rise in new orders as businesses acquired new customers, according to the Riyad Bank Saudi Arabia PMI (pdf) out yesterday. The headline purchasing managers’ index dipped to 57.0 in March from 57.2 in February, but remained firmly above the 50 threshold that separates growth from contraction.

Business conditions improved in 1Q 2024: “Business activity experienced a substantial uptick, marking the most significant growth in six months. The positive momentum also prompted accelerated purchasing activities and additional hiring, underscoring a buoyant market outlook,” said Riyadh Bank Chief Economist Naif Al-Ghaith.

Output levels hit a six-month high: The output sub-index rose to 62.2 in March, up from 61.5 in the previous month, recording its highest level since September 2023, Reuters reports. This was supported by faster growth in new orders which leaped to 64 in March up from 62.2 in February, along with strong demand, particularly in the manufacturing sector, according to the business newswire. Foreign sales saw an uptick for the second consecutive month, albeit at a moderate pace, the report reads.

There was a significant surge in new orders for non-oil firms, with the rate of expansion accelerating for the second consecutive month. Three times as many firms experienced an increase in new business volumes compared to those that reported a decline.

Cost inflation rose at the slowest pace in eight months, due to a marginal increase in staff salaries which is the smallest seen since the beginning of 2023.

Businesses logged their highest expectations for business activity in the next 12 months since November, according to the report. This positive outlook is fueled by favorable demand conditions, encouraging companies to up their staffing levels and boost inventories.

Average selling prices rose modestly last month, though they did so faster than in February. Some respondents noted that stronger client demand allowed them to raise prices, while others cited challenges in adjusting pricing strategies due to intense competition.

FROM THE REGION-

• Kuwait’s first publicly released PMI (pdf) showed an increase to 53.2, up from 52.7;
• The UAE PMI (pdf) dipped to 56.9, down from 57.1;
• The Egypt PMI (pdf) rose slightly to 47.6, up from 47.1;
• The Qatar PMI (pdf) dipped to 50.6, down from 51.