Saudi Arabia’s nonoil business activity growth accelerates

Growth in Saudi Arabia’s nonoil business activity accelerated in November, according to a survey.
The Saudi British Bank SABB has published the results of the headline SABB HSBC Saudi Arabia Purchasing Managers’ Index (PMI) for November 2013 — a monthly report issued by the bank and HSBC.
It reflects the economic performance of Saudi Arabian nonoil producing private sector companies through monitoring a number of variables, including output, orders, prices, stocks and employment.
At 57.1 in November, up from a reading of 56.7 in October, the headline PMI signaled an improvement in overall operating conditions at Saudi Arabian nonoil producing private sector companies.
The rate of expansion was up slightly from the previous month, but remained below the series average.
November data signaled a sharp rise in activity at Saudi Arabia’s nonoil producing private sector companies, with the pace of expansion accelerating since October.
New orders also increased solidly, and panel members linked this to good marketing efforts, increased tourism, higher construction activity and improved market conditions.
Client demand from foreign markets strengthened in November, with companies commenting on an improved global economic climate. Although sharp overall, the rate of growth in new export business eased markedly from October’s record-high.
Driven by sharp increases in output and new orders, a solid rise in purchasing activity at Saudi Arabia’s non-oil producing private sector companies was signaled in November. One-in-three survey respondents reported higher input buying, while only 6 percent indicated a decline. Meanwhile, holdings of input inventories accumulated at the fastest pace in eight months.
Backlogs of work continued to accumulate in November, as companies struggled to process strong inflows of new business.
Work-in-hand rose at the quickest pace in the 52-month survey history. Concurrently, suppliers’ delivery times shortened further, and at a broadly unchanged pace from October.
In order to meet higher business requirements, Saudi Arabia’s nonoil producing private sector companies hired additional workers in November.
The rate of job creation picked up from the previous month, but remained below the long-run series average.
Further cost pressures were reported in November, with the rate of inflation accelerating to the quickest in eight months. Around 14 percent of panelists reported higher cost burdens, while only 2 percent indicated lower input prices.
The latest rise in purchases prices was largely driven by general inflationary pressures and increased market demand, while higher living costs contributed to increased staff costs.
In response to higher input costs, Saudi Arabia’s nonoil producing private sector companies raised their output charges in November. Selling prices increased for a third month in succession, but at only a marginal rate overall.