Economy

Surge in new orders prompts salary rises

July 5, 2023, 1:38 PM

Saudi office workers stock exchange — Traders working at the Saudi stock exchange

Saudi employment growth at highest level since 2015
Hiring increase in marketing, accounts and technology
Increased foreign orders help UAE expansion reach four-year high

Companies across the Gulf’s biggest economies have enjoyed a surge in new orders both locally and from overseas, with some forced to raise salaries to meet demand.

The Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) reported that new orders in the country rose at “accelerated, multi-year record rates”.

Data showed that output in the kingdom increased at the steepest rate since March 2015, while sales growth was the strongest for nearly nine years.

“Heightened demand and improved market conditions have accelerated employment growth to the highest level since August 2015 as well as purchasing activities,” Naif Al-Ghaith, chief economist at Riyad Bank, said.

The report revealed that workers were recruited in a variety of sectors including marketing, accounts and technology.

As a consequence of the additional hiring, wage levels in Saudi Arabia also increased.

And while staff cost inflation was unchanged, it remained at a “historically high rate”.

“Increased salary payments also reflected a need to retain existing staff, with reports of higher wages being paid to keep experienced workers,” the report said.

The rate of expansion hit a four-year high in the UAE, which is monitored by the S&P Global UAE PMI.

Total new orders were supported by an increase in new business from abroad.

“The extent of the inflows in new work was such that backlogs of work continued to rise in June despite a ramping up of activity, further job creation and an expansion of purchasing activity,” Andrew Harker, economics director at S&P Global Market Intelligence, said.

Employment increased for the 14th consecutive month.

Harker added that further rises in staffing levels are expected in the coming months “as firms try to keep on top of workloads”.

According to a report by Qatar Financial Centre and S&P Global, the financial services industry was the biggest beneficiary in Qatar.

New business growth in financial services accelerated to a ten-month high.

New orders also rose in June, while employment levels and stocks of purchases were strong.

“With an uptick in hiring, supplier delivery times continued to be cut and vendor performance saw the biggest increase this year,” according to the tracker.

The economies of the Gulf Cooperation Council are projected to grow by 2.5 percent in 2023 and 3.2 percent next year, according to the World Bank Gulf Economic Update.