Saudi SME employment growth hits 10-month high

NOHA.GAD
Jan 12, 2025

Riyadh - Sharikat Mubasher: Saudi Arabia’s small and medium-sized enterprises (SME) employment growth accelerated to a 10-month high in December, backed by long-term expansion plans and robust domestic demand.

The Riyad Bank Saudi Arabia SME Purchasing Managers’ Index (PMI) report revealed that the SME PMI registered 56.9 in December, down slightly from 57.1 in November but well above the neutral 50 mark, indicating sustained growth in the sector.

The headline index posted 56.8 on average during the fourth quarter (Q4) of 2024, up from 54.5 in Q3-24 and the highest reading for any quarter since Q4-23.

SMEs widely commented on strong demand conditions, driven by greater business and consumer spending, alongside a supportive economic backdrop. However, output and new orders continued to increase at a slower pace than seen among large enterprises.

Further, job creation was a bright spot for SMEs in December as the staffing numbers and the growth rate accelerated to their fastest since February.

Naif Al-Ghaith, Chief Economist at Riyad Bank, stated that the upturn in the SME sector is a testament to the thriving economic environment, characterized by increasing output levels and a surge in incoming new work.

"While SMEs continue to see growth, it is noted that their pace of expansion in output and new orders lags behind that of larger enterprises, partially due to competitive pressures and the emergence of new market players,” Al-Ghaith added.

He further emphasized the crucial role of SMEs in driving innovation, creating jobs, and contributing significantly to the gross domestic product (GDP).

"Looking forward, the business activity expectations among SMEs have continued to improve, marking the third consecutive month of rising optimism. Confidence levels in December were the highest since March, with many survey respondents attributing their positive outlook to anticipated enhancements in broader domestic economic conditions”, Al-Ghaith elaborated.

The Riyad Bank Saudi Arabia SME PMI is a quarterly report designed to monitor business conditions among enterprises with less than 250 employees. The index is compiled from responses to monthly questionnaires sent to purchasing managers who participate in the Riyad Bank Saudi Arabia Whole Economy PMI surveys.


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