DUBAI – Saudi Arabia’s non-oil private sector continued strong growth in May, notching its 21st consecutive month of expansion, as demand withstood rising output costs, a survey showed on Sunday.
The headline seasonally adjusted S&P Global Saudi Arabia Purchasing Managers’ Index (PMI) for the whole economy was steady at 55.7 in May, the same as in April, which was its lowest reading since January and below the series average of 56.8.
The output 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 encouraged firms to pass-through higher input costs to their customers in May, with the latest PMI data indicating another solid increase in selling prices due to greater fuel, material and transport costs,” wrote David Owen, economist at survey compiler at S&P Global Market Intelligence.
“Customer demand appears to be responding well to price mark-ups so far, with another marked increase in new orders recorded in May, leading to a robust expansion in business activity,” Owen said.
“However, this may start to change as global inflation builds and household costs rise, particularly as global supply chains remain under considerable pressure from lockdowns in China and the Russia-Ukraine war.”
The output prices sub-index showed the pace of price increases slowed from April but remained solid, falling to 52.7 in May from 53.4.
Employment growth dipped marginally but remained in growth territory, where it has been each month since April 2021, excluding March this year.
As supply chains remain strained, including due to lockdowns in China and the Russia-Ukraine war, “the outlook for future activity remained notably weak, with just 11% of respondents signalling expectations of a rise in output by May 2023, less than half the survey’s long-run trend,” Owen said.
(Reporting by Yousef Saba; Editing by Toby Chopra)