Business activity in Saudi Arabia’s non-oil private sector hit a three-month high in April and employment grew for the first time in five months, a survey showed on Tuesday, as the kingdom shows signs of recovering from the coronavirus pandemic.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers’ Index (PMI) rose to 55.2 in April from 53.3 in March, remaining above the 50 mark that separates expansion from contraction for the eighth straight month.
“The Saudi Arabia PMI rebounded in April to indicate a strengthening of growth across the non-oil economy. New orders picked up at the quickest rate for three months as business conditions continued to recover from COVID-19,” said David Owen, Economist at IHS Markit.
The output subindex rose to 58.7 in April from 56.2 in March, with growth widely linked to improving new orders.
Higher demand led firms to increase staff for the first time in five months and at the fastest rate since November 2019.
The expansion of the private sector is vital for economic transformation plans pushed by Saudi Arabia’s Crown Prince Mohammed bin Salman to create jobs and wean the world’s top oil exporter off crude revenues.
However, despite the improvement in business conditions, the outlook for future activity was the weakest since last June, according to the survey.
“The business outlook weakened from March as fewer respondents projected that output would grow in the coming 12 months. Current concerns among businesses included a possible further wave of COVID-19 that could exacerbate issues with foreign travel,” said Owen.
The Saudi economy was hit hard last year amid the twin shock of the coronavirus crisis and lower oil prices.
The International Monetary Fund expects the economy to grow 2.9% this year, following a 4.1% contraction in 2020.
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