Saudi Arabia's non-oil private sector experienced strong growth in July, according to the Riyadh Bank Saudi Arabia PMI survey by S&P Global. The Purchasing Managers’ Index (PMI) slightly decreased to 54.4 from 55 in June and 56.4 in May, but any PMI reading above 50 still indicates expansion.
Naif Al-Ghaith, chief economist at Riyad Bank, emphasized that the sector's growth was driven by sustained demand and competitive pressures. He noted that despite a softer PMI, the non-oil sector is benefiting from increased demand and competitive pricing, which has helped maintain business activity.
The report highlighted that market competition has pressured prices downward as companies offer more attractive deals to maintain market share. Despite challenges such as a recent heatwave, staffing and inventory levels have continued to grow, helping businesses manage backlogs.
Al-Ghaith also pointed out that Saudi non-oil businesses are making significant strides in international markets, with growing exports contributing to the diversification of the economy away from oil dependency. The expansion in non-oil exports indicates progress in the country’s industrial and service sectors, supporting broader economic reforms.
Although output growth and new orders eased somewhat in July, with output growth hitting a six-month low and new business rising at the slowest pace in two-and-a-half years, improvements in vendor performance and a healthy work pipeline are positive signs for future growth. Overall, steady demand, competitive pricing, and increased exports create a positive outlook for Saudi Arabia’s economic diversification efforts.
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