DUBAI: Growth in non-oil business activity in Saudi Arabia accelerated in September from an 11-month low the previous month as higher sales supported overall output, a survey showed on Tuesday.
The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index rose to 57.2 in September from 56.6 in August - which was the lowest since September 2022, far above the 50 mark denoting growth and back above its long-run average of 56.9.
Overall output rebounded from a 19-month low in August with the sub-index accelerating to 62.8 from 59.1 the previous month as new business expanded rapidly.
The sub-index for new orders jumped four points to 64.2, although the pace of expansion remained slower than the average so far this year.
“The non-oil economy continues its growth despite the challenges arising from the current monetary policy conditions,” Naif Al-Ghaith, Riyad Bank’s chief economist said.
“Our view is that non-oil GDP will continue to support growth and remain above 5.5% for 2023 supported by the ongoing reforms under the Vision 2030,” he added, referring to the Saudi government’s development plans.
Saudi Arabia has lowered its 2023 growth forecast and expects to post a budget deficit this year rather than an earlier projected surplus, according to a preliminary budget statement.
But the government has increased its spending targets, which should support the non-oil growth forecast of 5.9% this year.
While domestic demand was supportive, sales to foreign customers contracted for the second consecutive month, the survey showed.
However, business confidence about increased output over the next 12 months remained positive on optimism over better market conditions and higher sales.