Saudi Non-Oil Growth Eases to 9-Month Low in Feb

Key Highlights

Growth in Saudi Arabia’s non-oil private sector moderated in February, with the Riyad Bank Purchasing Managers’ Index (PMI) falling to 56.1 from 56.3 in January. This marks the lowest reading in nine months, though it remains firmly in expansion territory above the 50.0 threshold.

Situational Overview

Despite the slight slowdown attributed to competitive pressures, the sector's fundamentals remain strong. The new orders sub-index held steady at 61.8, signaling robust domestic demand. Naif Al-Ghaith, Riyad Bank’s chief economist, credited this performance to a steady flow of new project approvals.

Economic Impact and Outlook

The survey revealed mixed signals for the economy. Employment growth accelerated to a four-month high, driven by increased sales. However, staff cost inflation surged to its highest level since the survey began in August 2009. Geopolitical tensions and regional disruptions have also led JPMorgan to slightly trim its 2026 non-oil growth forecast for the Kingdom.

Summary

While the pace of expansion has eased, Saudi Arabia's non-oil economy continues to grow, supported by strong demand. Businesses and investors will be closely monitoring rising cost pressures and regional stability as key factors influencing the future growth trajectory.

FAQ

Q: What does the latest Saudi PMI figure indicate?
A: It indicates a slight moderation in non-oil sector growth to a 9-month low in February, but the sector is still expanding at a strong pace.

Q: What are the main challenges facing the sector?
A: The main challenges include rising competitive pressures and record-high staff cost inflation, alongside external geopolitical uncertainties.

Source: Investing.com