The Kingdom topped the G20 countries in the performance of the purchasing managers’ index for the non-oil private sector, for the month of January of this year, as the index recorded 58.2 points in a consecutive growth since September 2020, reflecting the strength and durability of the Kingdom’s economy despite the instability in the global markets.
The results of the index showed an improvement in the level of commercial activity, and an increase in demand for goods and services within the non-oil private sector, amid expectations of officials in the sector to continue strong growth despite geopolitical developments, climate changes and increasing international uncertainties.
The rise in the index came with the performance of the private sector's production, which kept pace with the strong domestic demand for goods and services, driven by the improvement in the most important items of the index represented in production, new orders and export orders, in addition to the stock of purchases, as well as the increase in customer orders.
The increase in the purchasing managers' index in the Kingdom reflects confidence and optimism among investors and company owners, as companies began to provide more positive and optimistic expectations for the market.
Among the most prominent things recorded in the index is the decline in cost pressures, which reflects the success of policies to contain the global inflationary wave in many sectors of the Kingdom, in addition to the improvement of supply chains due to the policies of diversifying the economy and enhancing its flexibility during the last period.
The economic reforms of the national transformation in accordance with the Saudi Vision 2030 have contributed to empowering the private sector, by raising the quality, efficiency and digitization of government services provided to the private sector, in addition to the establishment of many programs, initiatives, financing funds, business incubators and accelerators.
And as one of the government support programs for the private sector, the Partner Program and the announcement of the first package to 28 companies with a value of 192 billion riyals, as well as providing investment and commercial facilities, as the number of foreign investment licenses increased in 2022, as a result of efforts to promote foreign direct investment and efforts to correct the conditions of violators of the anti-commercial concealment system.
The index rose from 56.9 points in December 2022 to 58.2 points in January 2023, a clear increase from the neutral level of 50 points, which is the boundary between growth and contraction, and the index result is the second highest level recorded since September 2021.
New orders also recorded a significant increase, amounting to 65.3 points, representing the second largest rate of increase in 16 months, which boosted the growth of non-oil activity, as this increase contributed to increasing the optimism of business owners and investors and the continuation of their expansion plans in conjunction with the improvement of market conditions.
The PMI in the non-oil private sector is based on questionnaires sent to purchasing managers in a body that includes about 400 private sector companies operating in various activities, including manufacturing, construction, wholesale and retail trade, and services.
The index consists of an average of five indicators with a specific weight for each of them, which are new orders by 30%, production by 25%, employment by 20%, suppliers’ delivery times by 15%, and stocks of purchases by 10%.
It is noteworthy that the distinguished performance in the Purchasing Managers’ Index comes after the Kingdom of Saudi Arabia’s global supremacy in the growth of the gross domestic product for the year 2022, which reflects the continuation of the growth and development process during the current year.
Okaz (Jeddah)