A survey showed today, Sunday, that the non-oil private sector in Saudi Arabia continued its strong growth in May, recording growth for the twenty-first consecutive month, as demand showed resilience in the face of rising production costs.
The Standard & Poor’s Global Purchasing Managers’ Index for Saudi Arabia, adjusted for seasonally factors, for the entire economy settled at 55.7 in May, the same reading recorded in April, which was the lowest since January and below the series average of 56.8.
The production sub-index, which measures business activity, fell slightly to 59.3 in May from 59.7 in April, which was also the slowest pace of growth since January. It was below the series average since 2009 of 61.4.
“The continued strength of the domestic non-oil economy has encouraged companies to pass on the increase in input costs to their customers in May, as the latest PMI data points to another strong increase in selling prices due to higher fuel and material costs,” wrote David Owen, economist at IHS Markit. and transportation.”
Owen added, “Customer demand appears to be well offsetting the price hike so far, with another notable increase in new orders recorded in May, resulting in a strong expansion in business activity.
“However, this may start to change as global inflation rises and household expenditures rise, especially as global supply chains remain under significant pressure as a result of the lockdowns in China and the Russo-Ukrainian war.”
The sub-index for production prices showed that the pace of price increases slowed compared to April but remained strong, falling to 52.7 in May from 53.4.
Employment growth has declined slightly but is still in the growth zone, where it has been since April 2021, with the exception of March of this year.
Owen said that with continued pressure on supply chains as a result of the shutdown in China and the Russia-Ukraine war, “the outlook for future activity remained notably weak, with only 11% of respondents indicating an expectation of higher production by May 2023, less than half of the survey’s long-term trend.” “.