Non-oil private sector expansion in Saudi Arabia accelerated to a six-month high in September, powered by elevated output and demand, according to the Riyad Bank Saudi Arabia PMI (pdf). The seasonally adjusted figure rose to 57.8 in September, up from 56.4 in August. The reading — well above the 50.0 mark that separates growth from contraction — signals a robust expansion, yet remains below January’s peak of 60.5.

New orders accelerated at a faster pace in September, as robust market conditions, new clients, elevated marketing and supportive pricing boosted domestic sales, and helped lift new work from international customers for the second consecutive month. New order sub-index surged to 63.3 in September, from 60.1 a month earlier, according to Reuters. Firms cited the uptick to “successful advertising campaigns and stronger demand from the GCC region,” Riyad Bank Chief Economist Naif Al Ghaith wrote in the report.

Output edged up at the fastest rate since February. The sub-index recorded its largest one-month gain in four years, with 27% of the survey participants reporting an expansion, while only 1% posted a decrease. “Overall, September’s survey highlights a resilient private sector that is navigating cost pressures while benefiting from firm demand and steady hiring,” Al Ghaith wrote.

Purchasing activity picked up to a three-month high, resulting in the biggest expansion in inventory level since April, according to the report. Firms actively built stocks to ensure smooth distribution and prepare for upcoming projects, the report read.

Employment maintained robust momentum as firms significantly raised their hiring to handle elevated workloads and enhance sales teams. Hiring growth saw a slight monthly dip but remained historically sharp, helping maintain work backlogs broadly stable.

Input cost inflation remained elevated, lifted by increasing wages, and broader inflation. Selling prices went up at a moderate rate, hitting a four-month low, as some firms eased their prices to sustain their competitiveness.

Business sentiment improved for the second month in a row, as firms pointed to increased demand and ongoing projects as key drivers of their positive outlook.

LOOKING AHEAD- Non-oil sector activity across much of the Gulf is forecast to moderate, Capital Economics’ James Swanston noted in a research note seen by EnterpriseAM last month. “Low oil prices will more than offset rising output volumes and, in turn, export receipts will be weaker this year than last,” Swanston wrote, adding that “current account and budget balances will deteriorate, prompting officials to make fiscal policy less supportive.”

ELSEWHERE IN THE REGION-

  • In the UAE, the headline PMI (pdf) edged up to 54.2, up from 53.3 in August
  • Egypt’s non-oil private sector activity (pdf) deepened its contraction in September, falling to 48.8, from 49.2 a month earlier.
  • Kuwait’s non-oil private sector saw a softened expansion in business conditions, with the headline PMI dropping to 52.2 in September, from 53.0 in August (pdf).
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