Saudi private sector growth drops to 9-month low on omicron concerns: IHS Markit

Fuelled by omicron worries, the growth of the Saudi private non-oil sector experienced a nine-month low as demand and confidence weakened in December, according to IHS Markit.

The Kingdom’s Purchasing Managers’ Index dropped considerably in December, falling by three points to 53.9 in December, the latest survey release showed. However, since it still crossed the 50-threshold, the reading still indicated improvement in conditions.

The drop in PMI was attributed to a sharp decline in new orders which, in turn, softened both backlogs and employment, with output expanding at the lowest rate since August.

Moreover, the firms’ outlook for the next year slumped to an 18-month low. Only 8 percent of surveyed firms thought that output will rise in 2022, despite some optimism concerning potentially higher demand and new product releases, the London-based firm added.

"The Saudi Arabia PMI ended the year on a dull note, as it registered its lowest reading for nine months due to concerns about the global spread of the Omicron variant leading to a marked slowdown in new business growth,” David Owen, economist at IHS Markit, said

In addition, costlier raw materials and transportation were a result of increasing input prices, as the inflation rate reached its highest level since June. This induced firms to raise their selling prices, yet there were some reports that healthy competition prompted some businesses to make discounts.