The Riyad Bank Saudi Arabia PMI® fell to 55.0 in June 2024, indicating a robust but slowing improvement in non-oil private sector business conditions. This decline highlights the need to carefully monitor future trends in the Saudi Arabian economy.
Strong Business Activity Amid Softening Demand
Despite the decline, business activity showed strong improvement. The robust Riyad Bank Saudi Arabia PMI® report points to a resilient non-oil private sector, although demand appears to be softening. New order growth has slowed to its weakest level in nearly two-and-a-half years, indicating potential challenges ahead.
Key Metrics of the Robust Riyad Bank Saudi Arabia PMI® Report
The PMI is a weighted average of five indices:
- New Orders (30%)
- Output (25%)
- Employment (20%)
- Suppliers’ Delivery Times (15%)
- Stocks of Purchases (10%)
These metrics provide a comprehensive overview of business conditions. Despite slowing new order growth, non-oil businesses reported a considerable increase in activity and output levels, showcasing their adaptability and resilience.
Slowing Growth in Input Purchases and Job Creation
Another key finding of the robust Riyad Bank Saudi Arabia PMI® report is the slowing growth in input purchases and job creation. While businesses continue to expand, the pace of growth has softened. This trend could impact future economic performance if it continues.
Discounts Affect Selling Prices
The report also highlights that discounts offered to customers have affected selling prices. This strategy aims to maintain market share in a competitive environment but could pressure profit margins.
Rising Input Prices
Input prices rose at the fastest pace in four months, driven by wages, materials, and technology costs. This rise in input prices could challenge businesses as they navigate the economic landscape.
Positive Outlook for Non-Oil GDP Growth
Despite these challenges, Q2 2024 growth figures indicate a positive outlook for non-oil GDP in Saudi Arabia, with expectations of growth exceeding 3%. This robust Riyad Bank Saudi Arabia PMI® report underscores the non-oil sector’s vital role in the country’s economic diversification efforts.
Conclusion
The robust Riyad Bank Saudi Arabia PMI® report for June 2024 reflects strong but slowing growth in the non-oil private sector. While challenges such as slowing new order growth and rising input prices persist, the overall outlook remains positive, with expectations of continued growth in the non-oil GDP.
Report Source: S&P Global
