Business activity in Saudi Arabia's non-oil private sector has displayed solid performance as 2024 came to a close, according to recent findings from Riyad Bank and S&P Global. The robust economic environment, coupled with high demand and innovative marketing initiatives, has led to the most notable increase in sales volumes in the past year.
Despite a slight decline in the Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI), which fell to 58.4 from a 17-month high of 59.0 recorded in November 2024, the figure remains indicative of continued expansion. The PMI has consistently indicated improving private sector operating conditions since September 2020. New order growth has surged for the fifth consecutive month, primarily fueled by the performances of wholesale and retail sectors.
Additionally, foreign business has seen a significant uptick, marking the largest increase in overseas orders in 17 months, attributed to product innovations and established relationships with international clients. As a result of this growth, companies have been increasing their inventories, and the pace of purchasing activity has reached a nine-month high.
Strong vendor relationships have contributed to the quickest rise in input holdings since May 2024. With ongoing high demand for inputs, cost inflation continues to be a pressing issue, though output inflation rates are showing signs of softening due to elevated competition. Looking towards the future, business confidence has seen an upswing, rising to a nine-month peak as a consequence of vigorous sales growth.
Naif Al-Ghaith, the chief economist at Riyad Bank, commented on the strong performance of Saudi Arabia's non-oil private sector, noting, "The non-oil GDP is projected to expand by over 4% in both 2024 and 2025, spurred by significant advancements in business conditions as part of Vision 2030's overarching goals of economic diversification and resilience.".