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Non-oil business activity maintained a steady growth rate in April, thanks to favorable market conditions including consistently high levels of demand, growth in customer base, new investments, and heightened competition, according to the Riyad Bank Saudi Arabia PMI (pdf) out yesterday. The headline purchasing managers’ index remained unchanged m-o-m at 57.0, remaining firmly above the 50 threshold that separates growth from contraction.
PMI figures are a good omen for GDP growth: “This uptrend hints at an anticipated spike in the non-oil GDP, likely exceeding the 4.5% [growth] mark for this year,” Riyadh Bank Chief Economist Naif Al Ghaith said.
REMEMBER- The World Bank recently raised its forecast for non-oil GDP growth to 4.8% in 2024, up from its earlier projection of 4.3%. Meanwhile, the government sees non-oil activity settling between 4.5% and 5.0% this year, Economy and Planning Minister Faisal Alibrahim had said at the World Economic Forum in January.
Output + new orders driving growth, despite rising at a slower m-o-m pace: The output subindex inched down to 61.9 last month, down from 62.2 in March, while the sub-index for new orders followed a similar trend, retreating to 61 last month, down from 64, according to Reuters.
Purchasing price inflation eased in April, as input costs grew at their slowest rate since July2023. Output prices, however, inched up for the sixth month in a row — “albeit only marginally” — with firms looking to provide competitive pricing.
Inventories surged at a “survey-record” clip, as firms upped their purchasing activity in anticipation of stronger sales. “Noteworthy is the surge in new orders and inventory expansion, indicative of a proactive response to mounting demand within the market,” Al Ghaith said.
The wholesale & retail sectors recorded record-high growth in output, supported by “competitive pricing, promotional activity, investment and expanding client bases, particularly in the domestic market.”
Meanwhile, vendor performance improved at the weakest rate in eight months in April despite faster delivery times. The rise in new orders and output led work backlogs to build up for the first time in three months, at the fastest rate of accumulation in 4.5 years, as capacity pressures became more apparent.
Employment levels fell for the first time in over two years in April, on the back of higher costs and tighter cashflows, although workers saw an uptick in their salaries. “This strategy aims to bolster productivity and ensure the retention of skilled workers within the expanding economy,” Al Ghaith said.
FROM THE REGION-
Egypt will report on 8 May. Meanwhile:
