Jul 05, 2022 12:35AM ET
By: AnalysisWatch
A survey showed on Tuesday that Saudi Arabia's private non-oil sector expanded in June at its fastest pace since September as demand continued to grow strongly despite the highest inflation in nearly two years.
S&P Global Saudi Arabia's core seasonally adjusted economy-wide order managers' index rose to 57.0 points in June from 55.7 points in May and April, exceeding the series average since 2008 of 56.8 points.
The manufacturing sub-index, which measures business activity, rose to 61.8 in June from 59.3 in May, also exceeding the series average of 61.4.
The rise was highlighted by a strong increase in the level of new business, which encouraged firms to expand production sharply and make larger purchases of inputs.
However, the latest data also signaled accelerating pressure on input costs as fuel and raw material prices continued to rise amid global supply challenges.
Notably, cost inflation reached its highest level in almost two years, triggering further increases in average administered prices.
Input cost inflation was the highest in 22 months, prompting some firms to raise prices.
While some companies expressed concerns that continued price increases could slow the current pace of growth, the latest survey data showed that overall manufacturing confidence had risen to a 17-month high.
This positive sentiment supported another modest increase in employment as well as efforts to build inventories for future demand.
The employment sub index fell marginally in June but remained just above the 50-point mark that separates growth from contraction.
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