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Saudi Arabia PMI May 2022

Saudi Arabia: Non-oil PMI stable in May

The Purchasing Managers’ Index (PMI), produced by S&P Global, was stable at 57.7 in May (April: 57.7). Consequently, the index remained above the 50-threshold, suggesting a continued improvement in business activity in the non-oil private sector relative to the month prior.

Output growth—the slowest since January—weighed on the reading, whereas new orders growth—slighter higher than last month—supported the reading. Output was constrained by rising input costs, which rose at the second-fastest pace in a year and a half. New orders were supported by the loosening of Covid-19 measures.

As a result of constrained output and stronger new orders, backlogs rose for the first time since the pandemic’s onset, with staffing numbers increasing for the second consecutive month as firms sought to boost capacity.

David Owen, an economist at S&P Global, commented on the latest reading:

“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. 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. Reflecting these risks, the outlook for future activity remained notably weak, with just 11% of respondents signaling expectations of a rise in output by May 2023, less than half the survey’s long-run trend.”

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