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Saudi Arabia PMI December 2021

Saudi Arabia: Non-oil PMI slips in December, but remains robust nonetheless

The Purchasing Managers’ Index (PMI), produced by IHS Markit, ticked down from 56.9 in November to 53.9 in December. Consequently, the index remained above the 50-threshold, but indicates a more moderate improvement in business activity in the non-oil private sector relative to the month prior.

December’s deceleration reflected weaker growth in new orders, which eased to the lowest level in nine months. Respondents noted concerns surrounding future demand conditions due to the spread of the Omicron variant held back purchasing activity. Moreover, output growth also moderated notably in December relative to the previous month, while the increase in employments levels also slowed. On the price front, transportation costs and elevated prices for raw materials continued to keep input price inflation elevated, which firms mostly passed on to consumers.

David Owen, an economist at IHS Markit, commented on the latest reading:

“The slower pace of economic recovery prompted firms to give a weaker projection for future output, with confidence slipping to an 18-month low. Alongside the Omicron variant, faster inflation and strong competition were also mentioned by companies with a downbeat outlook.”

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