DUBAI, March 5 (Reuters) – Activity in Saudi Arabia’s non-oil business sector rose to an eight-year high in February, a survey showed on Sunday, based on strong demand growth and an upbeat economic outlook.
Saudi Bank Riyadh’s seasonally adjusted Purchasing Managers’ Index jumped to 59.8 in February from 58.2 last month, the fastest rate of growth since March 2015.
A significant increase in new orders indicated improved economic conditions for businesses. The sub-index of new orders rose to 68.7 last month – the highest reading in more than eight years – from 65.3 in January, continuing a recent upward trend amid strong demand.
As a result, the manufacturing sub-index also posted a strong increase, to 65.6 in February from 63.6 last month, leading to further expansion in employment and purchases.
“Despite tighter monetary conditions, the balance of demand and supply looked strong and was driven by ongoing projects across the Kingdom, prompting sharper increases in output and new orders for firms, as well as increased labor demand, ” Chief Economist of Riyad Bank, Naif Al-Ghaith. said.
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However, inflationary pressures are pushing costs higher for firms. Saudi inflation rose to 3.4% in January, slightly higher than the previous month.
“Prices have responded to increased demand, with rising input costs particularly evident in the services and construction sectors,” Al-Ghaith said, adding that he expects cost pressures and the current elevated demand to continue in the term. middle.
Improving economic conditions are boosting confidence about future business activity over the next 12 months, the survey said.
Reporting by Rachna Uppal; Editing by Toby Chopra
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