Inflation weighed on Saudi business conditions in March but non-oil firms were optimistic about the outlook thanks to rising demand, a survey published on Tuesday showed.
The Riyad Bank Saudi PMI recorded 58.7 in March, easing from an eight-year record of 59.8 last month. But it was still above 50, the mark that separates growth from contraction.
“Despite the global headwinds including the recent credit crunch and heightened uncertainty, Saudi non-oil firms exhibited a robust degree of confidence towards future activity,” said Naif al-Ghaith, chief economist at Riyad Bank.
That meant Saudi firms increased their staffing at a pace that was among the quickest in the past five years. Salaries rose to the greatest degree since September 2016, as companies tried to compensate workers facing higher living costs.
Companies have struggled to pass on rising costs to customers amid tight competition, with some even reducing their charges, the survey showed. Input cost inflation picked up to the highest since the start of the year, driven by higher raw material prices and salary costs.
Inflation in the wider Gulf Arab region has been more moderate than in other parts of the world, thanks in part to limits on domestic fuel costs and other price controls.