{"id":100284,"date":"2025-09-04T00:00:00","date_gmt":"2025-09-04T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/2025\/09\/04\/non-oil-business-activity-posts-strong-expansion-in-august\/"},"modified":"2025-09-04T00:00:00","modified_gmt":"2025-09-04T00:00:00","slug":"non-oil-business-activity-posts-strong-expansion-in-august","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2025\/09\/04\/non-oil-business-activity-posts-strong-expansion-in-august\/","title":{"rendered":"Non-oil business activity posts strong expansion in August"},"content":{"rendered":"

Non-oil business activity in Saudi Arabia gained more momentum in <\/strong>August<\/strong>, boosted by a marked upturn in new orders, according to the Riyad Bank Saudi Arabia PMI (pdf)<\/a>. The seasonally adjusted figure hit 56.4 during the month, slightly up from 56.3 in July<\/a>. This reading, which is well above the 50.0 mark that separates growth from contraction, signals a solid expansion, though it remains notably lower than January\u2019s<\/a> peak of 60.5.<\/p>\n

\u201cAugust\u2019s outturn is, on past form, consistent with non-oil GDP growth of around 1% q-o-q in Q3<\/strong>, broadly in line with Q2\u2019s performance,\u201d Capital Economics\u2019 James Swanston noted in a recent research note seen by EnterpriseAM.<\/p>\n

New orders saw a slight uptick in August<\/strong>, supported in part by a renewed growth in export sales. Firms attributed this improvement to enhanced marketing efforts in external markets, stronger collaborations with clients in the GCC. Additional support came from rising client demand and domestic infrastructure projects.<\/p>\n

Output growth picked up in August<\/strong>, but the overall increase remained just above the 42-month low recorded in July. Firms reported that better economic conditions, stronger sales, and proactive marketing efforts supported the rise in business activity.<\/p>\n

Purchasing activity and inventories saw a significant boost: <\/strong>Businesses accelerated their purchasing activity in August at a faster rate than in July. This led to a four-month high in total inventories, as firms stepped up purchasing to meet current and expected demand.<\/p>\n

Employment also continued to increase sharply<\/strong>, with the pace of expansion being the softest since May, though it remained historically robust. This rise was largely driven by expanded sales departments, fresh project initiations and rising skills requirements. \u201cEmployment trends remained broadly supportive, with firms continuing to expand their headcounts to meet current and expected demand,\u201d Riyad Bank Chief Economist Naif Al Ghaith wrote in the report.<\/p>\n

Ongoing cost pressures pushed selling prices up:<\/strong> Input costs rose sharply in August, mainly due to a sharp rise in purchasing prices. \u201cInput prices remained elevated due to persistent pressures on material, transport, and technology-related expenses. Wage pressures eased slightly, but firms still faced broad cost challenges. With an increase in demand and the above factors, output prices continue to grow, though increases were generally modest,\u201d Al Ghaith noted.<\/p>\n

Business sentiment remains positive: <\/strong>Output expectations improved in August after hitting a 12-month low in July. Firms pointed to increased demand, ongoing projects, and supportive government policies as key drivers of their positive outlook.<\/p>\n

The bigger picture:<\/strong> Looking ahead, non-oil sector activity across much of the Gulf is forecast to moderate, Swanston noted. \u201cLow oil prices will more than offset rising output volumes and, in turn, export receipts will be weaker this year than last,\u201d Swanston wrote, adding that \u201ccurrent account and budget balances will deteriorate, prompting officials to make fiscal policy less supportive.\u201d<\/p>\n

ELSEWHERE IN THE REGION-<\/strong><\/p>\n