In October, Saudi Arabia’s non-oil private sector experienced a significant upturn, according to the latest figures from Riyad Bank’s Purchasing Managers’ Index (PMI). The index rose to 60.2 from 57.8 in September, marking one of the strongest performances since 2014. This growth was underpinned by a robust surge in demand and employment, creating one of the fastest job creation rates in 16 years.
The sector’s expansion was largely attributed to increased output, new orders and employment, driven by both domestic and foreign demand. Naif Al-Ghaith, Chief Economist at Riyad Bank, noted that October’s PMI results reflect “a strong start to the final quarter,” with sustained momentum in the Kingdom’s non-oil economy.
However, the rapid growth was accompanied by rising input costs. October saw a sharp increase in wages, attributed to salary revisions and bonuses, leading to increased production costs.
Furthermore, higher prices for imported raw materials contributed to the steepest rise in output prices since May 2023. These factors have placed upward pressure on firms, contributing to faster inflation in output prices.
Despite the cost pressures, the outlook remains positive. Many firms reported a strengthening in new orders for the third consecutive month, with a notable 48% of businesses experiencing higher sales. The increase was attributed to improving economic conditions, a growing client base and rising foreign investments.
This growth trend reflects wider economic diversification efforts within Saudi Arabia, part of Vision 2030 aimed at reducing the nation’s reliance on oil revenues.
