ABU DHABI(Reuters) -The expansion in Saudi Arabia’s non-oil private sector activity accelerated in May, driven by robust client demand and a surge in hiring, a survey showed on Thursday.
The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) rose to a three-month high of 57.2 from May’s 55.8, putting it further above the 50-point line denoting growth.
New order growth quickened to a four-month high, with the subindex rising to 64.3 in June from 62.5 in May. Domestic sales were the primary driver of this upturn, supported by successful client acquisitions and enhanced marketing strategies. However, export sales growth remained marginal.
“Firms largely linked the pickup in activity to improving sales, new project starts, and better demand conditions, although the pace of output growth was softer compared to previous highs,” said Naif Al-Ghaith, chief economist at Riyad Bank.
Non-oil private companies hired staff at the fastest rate since May 2011, as firms expanded teams to manage increased workloads.
Input prices also rose sharply, aligning with the second-quarter trend, leading firms to pass on higher costs to customers. Output prices increased solidly, the strongest rise in a year-and-a-half, following reductions in previous months.
Despite cost pressures, Saudi non-oil firms remained optimistic about future activity, the survey showed, with the Future Output Index reaching a two-year high. Confidence was buoyed by resilient domestic economic conditions and robust demand.
Last month, the International Monetary Fund raised its 2025 GDP growth forecast for Saudi Arabia to 3.5% from 3%, partly on the back of demand for government-led projects, and supported by the OPEC+ group’s plan to phase out oil production cuts.
(Reporting by Reuters; Editing by Hugh Lawson)
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