Saudi Arabia's non-oil private sector economy expanded for a third straight month in November, the kingdom's highest reading in 10 months, boosted by a rise in output as the recovery continues from a coronavirus-induced slowdown.
The seasonally adjusted IHS Markit Saudi Arabia Purchasing Managers' Index – a composite gauge that provides a snapshot of operating conditions in the non-oil private sector economy – rose to 54.7 in November from 51 in October. A reading above the neutral 50 level indicates an economic expansion, while a reading below points to a contraction.
"A third successive rise in the Saudi Arabia PMI pointed to an economy getting back on its feet in November," IHS Markit economist David Owen said.
"Supported by output and new business growth reaching 10-month highs, the data suggests a strong end to the year for the non-oil private sector.”
Non-oil private sector output in the Arab world's largest economy expanded at the fastest rate in ten months during November, as panellists highlighted an improvement in market conditions and a steeper increase in new work. Both domestic and foreign sales rose on the month, “marking only the second upturn in new export orders since February”.
Business confidence for the year ahead also improved as firms were encouraged by easing lockdown measures and news about effective vaccines.
Saudi Arabia continued to ease lockdown measures as the country's coronavirus cases on a daily basis declined. As of Thursday, the country has 357,872 infections, 347,513 recoveries and 5,919 deaths, according to Worldometer, which tracks the pandemic.
Breakthroughs in the development of several Covid-19 vaccines boosted the confidence of business owners. On Wednesday, the UK approved Pfizer’s Covid-19 vaccine, jumping ahead of the rest of the world in the race to begin mass inoculation.
Companies in Saudi Arabia sharply expanded purchasing activity in November on the back of new orders, marking the second rise in input buying since February, according to the IHS Markit survey.
On the employment front, hiring activity turned positive for the first time since January. A number of companies linked increased employment to rising demand, despite a further modest drop in outstanding work.
“Employment started to rise, while business confidence strengthened in the wake of encouraging vaccine news and sharper demand growth,” Mr Owen said. “As a result, there was evidence of firms raising investment in anticipation of an uplift in 2021 should the pandemic come to an end."
Meanwhile, Egypt, the Arab world's third-largest economy saw its non-oil private sector PMI drop to 50.9 in November from 51.4 in October due to concerns over a second wave of coronavirus infections across the globe. Still, it was the third month in a row of activity being above the neutral 50 mark.
"Weaker rises in output and new business suggested a tail-off in the economic recovery in November, although it came after output growth reached its highest in over six years during October,” Mr Owen added.
“Firms were constrained by a slower increase in export sales, particularly as many countries in Europe tightened lockdown measures to curb a second wave of the virus. Job numbers decreased again, continuing the trend seen for more than a year.”
Though private sector companies reduced their workforce for the 13th month in a row in November, the rate of decrease was the slowest in this sequence, as rising orders and increased backlogs led some firms to expand their workforces, according to the survey.