The survey revealed a noteworthy increase in sales volumes across the non-energy sector. Companies saw substantial growth in both business activity and inventories, which was largely attributed to strong domestic demand and improved economic conditions. This surge came amid broader global market challenges, yet the Saudi economy exhibited resilience, benefiting from increased consumer spending and a favorable business climate.
Rising demand in December prompted businesses to expand their operations, resulting in an uptick in output levels. As businesses adapted to changing market dynamics, this was also accompanied by an expansion in inventories, which had been under pressure earlier in the year. The robust expansion in the non-oil sector has been seen as a positive signal for the Kingdom’s longer-term plans to reduce its reliance on oil exports and diversify its economic base.
The growth trajectory of the non-oil private sector was also reflected in the employment sector. According to the survey, there was a marked increase in staffing levels, which helped meet the growing demands of the business environment. Companies continued to hire, seeing this as a necessary step to cope with expanding operations and to ensure that production levels were met. This increase in workforce size was a positive reflection of the Kingdom’s efforts to stimulate job creation and reduce unemployment.
As for inflation, the survey found that input costs remained stable. This stability was welcomed by companies that had been grappling with higher expenses earlier in the year. On the pricing front, the survey indicated that output prices remained subdued, with companies opting to absorb some of the higher costs instead of passing them on to consumers. This could be a sign of cautious optimism within businesses, trying to maintain competitiveness in a growing economy.
Saudi Arabia's continued push to diversify its economy has been a cornerstone of its Vision 2030 plan. The Vision aims to reduce the Kingdom's dependence on oil by promoting sectors such as tourism, technology, and manufacturing. This is further bolstered by strategic reforms designed to attract foreign investment and stimulate innovation within the private sector.
Recent reports highlight that key sectors, including construction, retail, and manufacturing, have shown resilience. Retail, in particular, benefitted from an increase in consumer confidence, as consumers spent more on goods and services. Similarly, the construction sector saw increased project activity, fueled by government initiatives and infrastructure developments. These trends are helping to further diversify the Kingdom’s economy, decreasing the volatility that comes with oil price fluctuations.
The surge in the PMI was also accompanied by reports of a positive outlook among businesses. Business sentiment was buoyed by expectations of continued growth, supported by government spending on infrastructure projects and economic stimulus programs. Despite the broader global uncertainties, Saudi Arabia’s business community expressed confidence in the Kingdom’s economic future, with many anticipating that growth in the non-oil sector would persist into 2025.
Key players in the private sector are optimistic about the outlook for the year ahead. Many businesses are focusing on adapting to changes in consumer behavior, particularly the growing demand for digital services and e-commerce. The government’s focus on innovation and digital transformation aligns well with the sector’s evolving needs, providing ample opportunities for growth in technology-driven industries.
The rise in non-oil sector activity reflects the success of several reforms introduced over the past few years. These reforms, which range from labor market adjustments to regulatory changes, have played a crucial role in fostering a more competitive and business-friendly environment. While challenges remain, the success seen in the private sector suggests that Saudi Arabia is on track to meet its economic goals in the years leading up to 2030.