Saudi Non-Oil Business Growth Slows in October — Market Talk

What happened

Saudi Arabia’s non-oil private-sector growth slowed in October, with the purchasing managers’ index, a survey-based measure of business conditions, falling to 54.0 from 55.3 in September. It remained above 50, indicating expansion, as new orders moderated and export demand stayed weak.

Confirmed

Global impact / market context

Slower new-order growth can limit future sales for non-oil businesses, while weak exports reduce demand beyond the domestic market. Higher purchasing-price inflation can raise input costs; easing selling-price inflation may make it harder for firms to pass those costs on and protect profit per sale.

Analyst inference

The report presents a mixed picture: domestic demand supported faster output growth, but export orders fell for an eighth consecutive month amid shipping disruptions and higher freight and insurance costs. Input-price inflation rose to a six-month high, while selling-price inflation reached a nine-month low.

Confirmed

What to watch

1. Whether new orders recover in subsequent reports, since sustained weakness would point to a thinner pipeline of work and could restrain non-oil companies’ future revenue. Analyst inference
2. Whether shipping disruptions and freight and insurance costs ease, as continued export pressure could weigh on overseas sales and add costs for exporters. Analyst inference
3. Whether purchasing-price inflation remains elevated while selling-price inflation stays subdued, which could squeeze the difference between businesses’ selling prices and costs. Analyst inference

Evidence

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