ECONOMY

STRONG FINISH TO 2023

The latest Purchasing Managers’ Index (PMI) data indicates robust improvement in business conditions within Saudi Arabia's non-oil private sector as 2023 drew to a close. The PMI data reveals a significant surge in activity, propelled by new order intakes, which facilitated the fastest sales growth rate since June.

Bolstered by heightened demand, companies gained increased confidence in pricing strategies, leading to a notable uptick in purchasing activity. However, the report notes a slight decline in employment growth and business activity expectations compared to November.

The kingdom’s non-oil firms continued to experience a substantial surge in activity levels in December, mirroring the momentum observed in November and cutting across various monitored sectors. The expansion in output was primarily attributed to higher inflows of new business, marking the sharpest rate of increase since June. Furthermore, the pace of sales growth reached one of the quickest levels recorded in the past nine years, driven by new clients and increased demand.

In response to the heightened demand, non-oil companies escalated their input purchases, resulting in a marked overall increase in purchases. This, in turn, facilitated a sharp and accelerated rise in stock levels compared to November. Additionally, businesses reaped the benefits of significantly reduced average supplier delivery times, marking one of the sharpest improvements recorded in the 14-year history of the survey.

Higher business activity has also resulted in a strong labour market. Overall unemployment rate in the kingdom for Saudis and non-Saudis reached 5.1% in the third quarter, a 0.7 percentage point decline compared to the same period last year, according to the General Authority for Statistics.

Unemployment rate among Saudis reached 8.6%, a 1.3 percentage point (pp) decline compared to the same period in 2022. The labour force participation rate of Saudis slightly decreased by 0.1 pp reaching 51.6% compared to the previous quarter and decreased by 0.9 pp compared to a year ago. The employment-to-population ratio of Saudis dropped from last quarter by 0.2 pp to 47.2% and decreasing by 0.1 pp compared to Q3/2022.

Labour force participation rate and the employment-to-population ratio for women both increased by 0.6 pp to 35.9% and by 0.3 pp to 30.1%, respectively. Among Saudi males, the labour force participation rate decreased by 0.7 pp reaching 66.8%, while the employment-to-population ratio also decreased by 0.7 pp to reach 63.7%.