Saudi Arabia: Business activity in the Saudi Arabian non-oil private sector in April accelerated at the fastest pace in three months, owing to a significant rise in new sales as businesses recovered from the impact of the coronavirus disease (COVID-19) pandemic, according to the latest IHS Markit Purchasing Managers’ Index (PMI) survey.

Firms in the Kingdom also expanded staff numbers for the first time in five months, the index showed.

The seasonally adjusted PMI rose to a three-month high of 55.2 in April, up from 53.3 in March, indicating a significant improvement in non-oil private sector business conditions. Any score above 50 indicates growth, and the figure has been increasing every month since September 2020.

David Owen, an economist at IHS Markit, said: “The Saudi Arabia PMI rebounded in April to indicate a strengthening of growth across the non-oil economy. New orders picked up at the quickest rate for three months as business conditions continued to recover from COVID-19. The rise helped lead to a renewed uplift in employment, with the pace of increase the fastest since November 2019.

“Despite a boost to demand, the business outlook weakened from March as fewer respondents projected that output would grow in the coming 12 months. Current concerns among businesses included a possible further wave of COVID-19 that could exacerbate issues with foreign travel,” he added.

In the most recent survey period, 24 percent of companies found that output had increased. The expansion was fueled by a strong increase in new orders, with demand picking up for the first time this year amid expectations of COVID-19 measures being eased. Firms were also supported by a renewed growth in export revenues, which was mainly related to stronger demand from Asia.

Saudi Arabia’s private sector jobs also increased in April for the first time in five months. Furthermore, work growth accelerated to its highest level since late 2019. Efforts to increase capacity have helped to minimize backlogs, though at a slower pace than in September.

Despite some companies experiencing delays in receiving goods and products due to global supply chain issues, average vendor output improved for the third time in four months. Local suppliers were reportedly able to expand their ability due to the relaxation of COVID-19 restrictions.

Global supply issues, however, led to a significant increase in freight charges in April because of a rise in oil prices. In addition, raw material prices increased, resulting in a faster rise in total production costs compared to March. A number of firms passed these costs on to their customers by increasing their prices.

Concerns about the pace of the economic recovery from COVID-19, as well as the pandemic’s effect on tourism, were frequently expressed by respondents as the level of optimism decreased from the peak seen in December 2020.