Saudi Arabia's Non-Oil Business Sector Hits Four-Month High in October

Saudi Arabia's non-oil business sector continued its impressive growth streak in October, marking the second consecutive month of acceleration, as indicated by a recent survey.

The survey, conducted on Sunday, revealed that a surge in new orders was a key driver of this expansion, resulting in a substantial increase in employment levels.

The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers' Index climbed to 58.4 in October, up from 57.2 in September.

This figure significantly surpasses the pivotal 50-point threshold, indicating robust growth and marking the highest reading since June.

Of particular note, new business activities picked up pace, with the new orders subindex surging to 66.1 in October, also hitting a four-month high, up from 64.2 the previous month.

The growth in output and new business was a widespread phenomenon, spanning various sectors, including manufacturing and construction, as per the survey findings.

The subindex for output growth remained strong at 60.1, although slightly weaker than the long-term trend.

Growth and Employment Surge in Saudi Arabia's Non-Oil Sector

Naif Al-Ghaith, Chief Economist at Riyad Bank, commented on these developments, stating, "The surge in new orders signifies an expanding market and suggests that the non-oil sector is experiencing sustained growth and demand for its products." He further noted, "The employment expansion is a promising sign for the Saudi economy, as it suggests a growing demand for labor and a potential improvement in the job market." The employment subindex soared to a nine-year high of 54.5 in October, up from 52.0 in September.

Fostering job opportunities for Saudi citizens in an expanding private sector remains a key priority for the government as it continues to implement Vision 2030, a comprehensive economic diversification plan championed by Crown Prince Mohammed bin Salman.

The government has set ambitious targets, with an estimated non-oil economic growth rate of around 6% in 2023, significantly outperforming the overall GDP growth.

While the level of confidence in future output showed a minor decrease compared to the previous month, firms maintain an overall optimistic outlook. This data suggests that Saudi Arabia's non-oil business sector is on a positive trajectory, contributing to the country's economic diversification and job market expansion.

Rachna Uppal / Reuters