RIYADH: Saudi Arabia’s non-oil private sector ended 2024 on a strong footing, driven by the fastest sales growth in a year, which pushed the Kingdom’s Purchasing Managers’ Index to 58.4 in December, according to a survey.
The Riyad Bank Saudi Arabia PMI survey, compiled by S&P Global, showed that total sales volumes in the non-energy sector rose sharply in December, fueling robust increases in business activity and inventories.
This performance underscores the Kingdom’s ongoing economic diversification under Vision 2030, which aims to reduce reliance on oil and promote sustainable growth.
“Saudi Arabia’s non-oil private sector ended 2024 on a high note, reflecting the successful strides made under Vision 2030. The Purchasing Managers’ Index recorded 58.4, underscoring the sector’s resilience and expansion,” said Naif Al-Ghaith, chief economist at Riyad Bank.
However, December’s PMI slightly declined from November’s 17-month high of 59. In October, the PMI stood at 56.9, and it registered 56.3 and 54.8 in September and August, respectively.
According to S&P Global, any PMI reading above 50 signals growth in the non-oil sector, while readings below 50 indicate contraction. Notably, the Kingdom’s PMI has stayed above the 50 neutral mark continuously since September 2020, affirming the progress of its non-energy sector.
The survey highlighted that cost inflation remained sharp in December due to strong input demand, but an easing of job creation helped to soften salary pressures for businesses.
Non-oil businesses participating in the PMI survey noted that strong economic conditions, higher client demand, and new marketing campaigns contributed to a significant upturn in new work during the final month of 2024.
“The non-oil GDP is expected to grow by more than 4 percent in 2024 and 2025, driven by substantial improvements in business conditions. A significant rise in new orders has bolstered this growth, indicating increased market confidence and demand,” said Al-Ghaith.
He added: “Despite challenges such as sharp cost inflation due to strong input demand, the sector has navigated these pressures effectively. December saw a notable increase in material costs, yet wage costs rose more moderately. This balance was aided by an easing in job creation, which helped soften salary pressures.”
Saudi Arabia’s non-oil businesses also strengthened their presence in international markets. The survey reported the sharpest increase in new export orders in 17 months, driven by product innovations and strong relationships with international clients.
Business expectations improved to a nine-month high in December, with firms expressing optimism that robust sales growth would lead to greater activity levels in 2025.
“With the non-oil GDP anticipated to continue its upward trajectory, the sector is well-positioned to contribute significantly to the Kingdom’s long-term economic goals,” said Al-Ghaith.
He added: “The focus on improving business conditions, boosting domestic and international demand, and managing inflationary pressures aligns seamlessly with Vision 2030’s objectives, setting the stage for sustained growth and prosperity in the upcoming years.”
