Growth in Saudi Arabia’s non-oil business activity slowed to a three-month low in December, a survey showed on Tuesday, although higher sales and strong demand ensured firms remained confident about the outlook for the coming year.
The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index fell to 56.9 in December from 58.5 in November. It was the lowest reading since September but was still well above the 50 mark separating growth from contraction.
The rate of job creation was the fastest recorded in almost five years, with the employment subindex rising to 52.0 in December from 50.6 in November. Firms mostly linked this growth to the trend towards higher new orders.
However, the output subindex softened to 61 from November’s 64.6 while the pace of growth in new orders also slowed.
The Saudi government has estimated GDP growth of almost 9 per cent in 2022, revised up from its earlier estimates, with the finance ministry attributing the adjustment largely to non-oil private sector activity.
“We see operating conditions remaining favourable in December, characterised by rapid growth in the non-oil activities and a robust labour market by the end of 2022, with both jobs and wages having far more momentum than previously thought,” said Naif Al-Ghaith, chief economist at Riyad Bank.
“All in all, December data points to a continuous growth for the fourth quarter with optimism on the upcoming year. This made us comfortably project growth of non-oil GDP to exceed 4 per cent in 2023.”
Although business confidence about the year ahead remained broadly positive on expectations of increased investment and stronger demand, the degree of confidence weakened to a seven-month low in December.