Business activity in the non-oil private sector of Saudi Arabia, the Arab world’s largest economy, continued to improve in November, boosted by the easing of Covid-19 restrictions and a rise in tourism activity.
Although the kingdom's seasonally adjusted purchasing managers' index – a gauge designed to give a snapshot of operating conditions in the non-oil private sector economy – slipped to 56.9 in November, from 57.7 in October, the reading remained well above the neutral 50 level and in line with the average recorded over the 12-year series.
A reading above 50 indicates expansion while a reading below points to a contraction.
The kingdom's PMI "continued to signal a strong end to the year for the non-oil economy”, said IHS Markit economist David Owen.
“Despite slipping to a three-month low, new business growth was rapid overall, while activity expanded at one of the quickest rates since the start of the pandemic.”
New orders at businesses were strong with the index pointing to "a robust upturn in new business volumes that was stronger than most of the recovery period since the initial Covid-19 lockdown", according to the survey.
Those polled linked higher sales to a continued return to normal economic conditions and a boost to tourism from the easing of travel restrictions.
The kingdom is investing billions of dollars in the hospitality and tourism industry. Tourism is expected to account for more than 10 per cent of Saudi Arabia’s gross domestic product by 2030 – up from 3 per cent currently – and provide one million jobs. Earlier this year, the country set up a $4 billion fund to develop the tourism industry.
The kingdom is developing a number of tourism projects, including Neom, a $500bn futuristic city comprising a nature reserve, coral reefs and heritage sites on a number of islands along the Red Sea, and Qiddiya, a huge entertainment and sports project.
The Red Sea Development Company is also building a mega-tourism project on Saudi Arabia’s west coast.
The higher output and modest prices led businesses to hire more people, with the employment picking up at the quickest rate since June, according to the IHS survey.
Purchasing activity also grew as companies looked to support stock levels to avoid supply problems amid the pandemic.
"Another key indicator – backlogs of work – signalled that the capacity gap registered since February 2020 had narrowed to its smallest so far, suggesting that higher demand levels are starting to put pressure on businesses,” Mr Owen said.
Cost pressures faced by non-oil companies remained modest in November, with the rate of inflation “ticking down for the first time since August”, according to the survey.
Egypt's PMI remains unchanged despite declining business conditions
Meanwhile, business conditions in Egypt's non-oil private sector economy continued to decline in November due to high inflation and supply shortages in the Arab world's third-largest economy.
However, the headline PMI reading remained unchanged at 48.7 from the previous month.
"Inflationary pressures and supply shortages were again the most prominent depressors of Egypt's non-oil economy in November,” Mr Owen said.
“Output was down for the third month in a row, matched by a third consecutive decline in new business as higher selling prices deterred client spending in the domestic economy.”
Egypt's annual inflation in urban parts of the country eased to 6.3 per cent in October, from a 20-month high of 6.6 per cent in September, according to the statistics agency Capmas.
The month-on-month CPI figure rose to 1.5 per cent, from 1.1 per cent.
