Saudi Arabia's non-oil sector witnessed strong growth in October, resulting in a significant rise in employment levels, a business survey revealed on Sunday.

A robust increase in new businesses has led to a nine-year high in job numbers. The Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) rose for the second consecutive month in October, picking up to 58.4 from 57.2 in September. The reading was the highest since June.

Naif Al-Ghaith PhD, Chief Economist at Riyad Bank, said: "The employment expansion is a promising sign for the Saudi economy, as it suggests a growing demand for labour and a potential improvement in the job market."

"Another contributing factor to the expanded PMI was the strong growth in new orders, which reached the highest level since June. This indicates a renewed sense of confidence among businesses and a willingness to invest in new projects," he added. 

Growth in output and new business remained widespread across the manufacturing, construction, wholesale & retail and services sectors.

On the flip side, an active labour market triggered wage pressures in October. Combined with a faster increase in purchase prices, the pace of overall input cost inflation ticked up to the joint-fastest in over a year. 

Nonetheless, price discounting continued for the second straight month as firms highlighted competitive pressures, resulting in the strongest drop in output prices since May 2020, the PMI data revealed. 

“Despite facing higher costs, the selling prices of goods and services continued to decline. This decline can be attributed to intense competition within the market, as firms strive to maintain their market share by keeping prices competitive," Al-Ghaith said. "While this may impact profit margins, it benefits consumers by providing them with more affordable products and contributing to overall price stability," he said.

According to the PMI survey, firms maintained a great degree of confidence regarding future business activity due to increasing demand and strong order pipelines. However, the degree of optimism eased slightly.

(Writing by Seban Scaria seban.scaria@lseg.com; editing by Daniel Luiz)