Resilient Rebound: Non-Oil Business Activity Surges in Saudi Arabia

In February, non-oil business activity in Saudi Arabia experienced a notable rebound, as indicated by a survey released on Tuesday. The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index climbed to 57.2, up from January’s reading of 55.4, marking the strongest output growth in five months following January’s two-year low.

The surge in output was particularly noteworthy, with the sub-index for output reaching 61.5, the highest growth rate since September. This uptick signals an increase in demand momentum. Additionally, new order activity saw a resurgence, supported by a return to growth in export orders.

The new orders sub-index rose to 62.2 in February, reflecting expansionary conditions, although the pace of increase was slower compared to recent months. Naif Al-Ghaith, Chief Economist at Riyad Bank, attributed the growth to the services and construction sectors. He also highlighted the significant rise in new export orders, indicating growing demand for domestic products in international markets and enhanced competitiveness in local industries.

Looking ahead, the 12-month business outlook improved in February, buoyed by stronger demand projections. Despite projections slightly lower than previously anticipated, Saudi Arabia’s Finance Minister noted that non-oil growth is expected to exceed 5% in the medium term.

Last year, non-oil activities outperformed the oil sector, which experienced a sharp slowdown due to production cuts and lower prices.