Saudi Arabia’s Purchasing Managers’ Index fell by 0.7 points in January, according to a press release from IHS Markit.
The headline index figure slipped to 53.2 from 53.9 in December 2021, having fallen for the fourth consecutive month.
It hit the 15-month lowest level after dropping to the nine-month low in December 2021.
“Customer demand in the non-oil sector was quelled by the omicron variant…, leading to slower rises in activity and new business, as well as the softest improvement in business conditions since October 2020,” the press release said quoting David Owen, Economist at IHS Markit.
As customer demand slowed in January, output growth slowed again as well, after hitting the lowest rate since August 2021 in December.
Growth in new orders has slowed for the fourth consecutive month and hit the lowest level since October 2020.
Export sales decreased for the first time since March, albeit marginally on fewer new orders from foreigners. Some firms cited high costs for global shipping and transport.
Meanwhile, firms’ purchasing activity remained at high levels similar to the previous month. Companies made efforts to build inventories and support output.
Growth in price of inputs, such as raw materials, moderated to mark the softest increase in total output charges since August 2021.
Business confidence strengthened after it fell to an 18-month low in December 2021. Optimism towards future activity picked up. Some of the firms covered in the survey hope that a recovery from the pandemic will lead to a stronger growth in new business and a stabilisation of global markets.
IHS Markit compiles the Saudi Arabia PMI from responses to questionnaires sent to purchasing managers in a panel of around 400 private sector companies.
The headline figure is the Purchasing Managers’ Index. The PMI is a weighted average of the following five indices: New Orders — 30 percent, Output — 25 percent, Employment — 20 percent, Suppliers’ Delivery Times — 15 percent; and Stocks of Purchases 10 percent.