Saudi Arabia: Non-oil PMI rises marginally to a 14-month high in January
The Purchasing Managers’ Index (PMI), produced by IHS Markit, increased slightly from 57.0 in December to 57.1 in January, the highest reading since November 2019. Consequently, the index remained well above the 50-threshold, indicating improving business activity in the non-oil private sector.
January’s result reflected stronger growth in output, supported by rising new orders—particularly foreign demand which increased at the fastest pace in roughly four years. However, employment conditions remained subdued and firms reported excess capacity as seen through falling backlogs of work. On the price front, both input and output prices continued to rise at a marginal pace. Lastly, business sentiment remained healthy in January amid the Covid-19 vaccine rollout but eased slightly from the previous month.
David Owen, an economist at IHS Markit, commented:
“While client demand has soared in recent months, this has not fed through into rising employment numbers as January data signalled a slight reduction in workforces. Firms indicated that excess capacity was sufficient to deal with incoming work and reduce backlogs as well. The non-oil sector has also escaped the trends of weakening supply chains and rising cost inflation recorded elsewhere around the world.”