Analysis Manufacturing Saudi non-oil export orders rise at fastest pace for a year By Matt Smith November 2, 2022 Mawani The Saudi Ports Authority shipping lane has been very busy between the kingdom and Asian countries PMI survey shows sharp improvement in operating conditionsPrivate sector exports include chemicals and plastics Conditions expected to remain robust over the next 12 months New export orders for Saudi Arabia’s non-oil sector in October increased at their fastest rate for nearly a year, the Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) survey revealed on Wednesday. This demand helped the PMI, which gauges business confidence, to climb 0.6 percentage points to 57.2 in October. A reading above 50.0 shows an economy is growing and October’s figure – the second highest reading over the past 12 months – indicates “a sharp improvement in operating conditions” across the kingdom’s non-oil sector, the report states. PIF sets up company to make Saudi a global hub for halalExports help Saudi non-oil sector hit 10-month highManufacturing and mining help Saudi industrial output rise 20.8% “The strong business performance was spread widely across the non-oil economy. “Output expansions were seen in the manufacturing, construction, wholesale and retail and services categories, with the strongest upturn registered among goods producers,” it added. Rising demand from foreign markets led October to be the first acceleration in exports growth since July. The PMI survey follows central bank data showing a sustained increase in Saudi private sector exports financed through commercial banks. These are poised to hit their highest total since at least 2017. Opened credits in the first nine months of 2022 amounted to SAR 72.428 billion ($19.314 billion), according to AGBI calculations based on central bank data. That compares with SAR 90.643 billion riyals for the full-year 2021. On a quarterly basis, export credits are also increasing – to SAR 29.766 billion in the third quarter from SAR 16.284 billion in the preceding three months. Of the third quarter total, 34.9 percent of the credits were to ship goods to the rest of the GCC, 12.3 percent were to non-GCC Arab countries, 5.6 were to North America, 3.1 percent were to Europe and 44 percent were to other countries including those in south, central and east Asia. “(Non-oil) exports are performing very well,” David Owen, an economist at S&P Global, told AGBI. “We’re still seeing fairly strong demand. It has been improving quite a bit over the past year or so, after the pandemic, and (is) still enjoying that resilient recovery.” Almost all Saudi’s private sector exports financed through private banks, which excludes hydrocarbons by state-run Saudi Aramco, are chemicals and plastics and other industrial products. Chemicals and plastics (exports financed through private banks) totalled SAR 10.7 billion in the third quarter – up from SAR 6.0 billion in the preceding three months – while those for other industrial products amounted to SAR 19.0 billion. That compares with SAR 10.4bn in the second quarter. The PMI survey found that firms believe operating conditions will remain “robust” over the next 12 months, with output expectations hitting their highest level since January 2021. Respondents cited hopes of higher sales and sustained economic growth for their bullish outlook. Companies also reported the smallest increase in input costs since February as inflationary pressures eased.