Saudi Arabia's non-oil economy grew at its fastest pace in four months in October, with business activity continuing to grow in the fourth quarter on higher client orders and improving economic conditions.
The headline Riyad Bank purchasing managers' index reading climbed to 58.4 in October, up from 57.2 in September, the highest level since June.
The 50-point mark separates expansion from contraction in activity.
Business activity continued to grow at a marked rate at the start of the fourth quarter, as client orders grew amid continued economic momentum.
Businesses surveyed also reported a sharp rise in new business intakes. Growth in both output and new business remained well-spread across the manufacturing, construction, wholesale and retail and services sectors.
““Another contributing factor to the expanded PMI was the strong growth in new orders …[which] indicates a renewed sense of confidence among businesses and a willingness to invest in new projects,” said Naif Al Ghaith, chief economist at Riyad Bank.
The survey also indicated a “steep” uplift in hiring across the non-oil private sector amid strong demand and “robust” output expectations, with overall employment recording the sharpest increase since October 2014.
“The employment expansion is a promising sign for the Saudi economy, as it suggests a growing demand for labour and a potential improvement in the job market,” said Mr Al Ghaith.
A heated labour market led to higher wages and increased input costs, causing overall cost inflation to rise sharply, matching the fastest rate in over a year, the survey said.
Despite that, firms continued to offer discounts due to competitive pressures, resulting in the most significant drop in output prices since May 2020, it added.
Saudi Arabia’s economy, the Arab world’s largest, contracted by 4.5 per cent annually in the third quarter due to oil production cuts by the Opec group's largest producer.
Oil-related activity during the three months to the end of September declined by 17.3 per cent, according to estimates released by the General Authority for Statistics (Gastat) last week.
Non-oil and government activity increased in the third quarter by 3.6 per cent and 1.9 per cent respectively on an annual basis.
Non-oil growth this year is projected to reach 5.9 per cent, led by the trade, hospitality and tourism sectors, according to government data.
In Egypt, the non-oil private sector economy continued to soften in October as inflationary pressures affected demand and business activity momentum.
The country's headline S&P Global Egypt PMI dropped to 47.9 in October from 48.7 in September, the lowest in five months.
“A faster decline in new business volumes and sustained weakness in output were recorded as supply shortages and inflation continued to bite,” said David Owen, senior economist at S&P Global Market Intelligence.
“However, despite sliding from the levels seen in the third quarter of the year, the PMI remained above the readings taken at the start of the year when inflationary pressures on companies were even steeper,” Mr Owen said.
Last month, S&P Global Ratings downgraded Egypt's rating further into negative territory, citing the slow progress being made on monetary and structural reforms.
The country's long-term foreign and local currency sovereign credit ratings were revised to “B-” from “B”, which is “highly speculative” and is six levels below investment grade, the ratings agency said.