Dubai, Mar. 5 (BNA): Non-oil business activity in Saudi Arabia rose to an eight-year high in February, based on a strong increase in demand and an optimistic economic outlook, a survey showed on Sunday.
The seasonally adjusted Riyad Bank of Saudi Arabia’s purchasing managers’ index jumped to 59.8 in February from 58.2 in the previous month, the fastest rate of increase since March 2015, Reuters reported.
The sharp rise in new orders indicates an improvement in economic conditions for businesses. The new orders sub-index rose to 68.7 last month – the highest reading in more than eight years – from 65.3 in January, continuing a recent upward trend on strong demand momentum.
As a result, the output sub-index recorded a strong increase, reaching 65.6 in February from 63.6 in the previous month, which led to further expansion in hiring and purchasing.
Nayef Al-Ghaith, chief economist at Riyad Bank, “Despite the tightening of monetary conditions, the balance of supply and demand appeared to be strong and was driven by projects underway across the Kingdom, which caused a sharp increase in production and new orders for companies, as well as an increase in the demand for labor.” He said.
However, inflationary pressures are pushing costs up for companies. Saudi inflation rose to 3.4 percent in January, up slightly from the previous month.
“Prices have responded to the increase in demand, with input costs clearly increasing, especially in the services and construction sectors,” Al-Ghaith said, adding that he expects cost pressures and the current increasing demand to continue in the medium term.
The survey said that improving economic conditions drive confidence in future business activity over the next 12 months.