KSA consumption growth likely to be strong in 2015

The recent Royal decrees, which reinforced the view that the government will not cut expenditure due to lower oil prices, will add renewed confidence to investors going forward, according to economists.
December data showed healthy growth in consumer spending. Consumption growth this year is likely to be strong following the recent Royal decrees, said the researchers from Jadwa Investment.
Cement sales reached an all-time high of 5.5 million tons in December, while sales for 2014 grew by 0.8 percent year-on-year, states Jadwa’s Saudi Chartbook for February 2015.
Cash withdrawals from ATMs reached SR64.6 billion in December, growing by 14.7 year-on- year, while point of sale transactions stood at SR15.7 billion, according to the report.
PMI increased to 57.9 in December following a slowdown in the previous two months, pointing to a sustained growth and a continued expansion in the nonoil economy.
After remaining flat in 2013, real income per capita grew by 1 percent, year-on-year to reach $21,101 in 2014. In contrast, real nonoil income per capita growth slowed to 2.4 percent in 2014, compared to a growth of 3.6 percent in the previous year, said the Jadwa report.
For the first time, the Central Department of Statistics & Information (CDSI) published the GINI index for Saudi Arabia, showing a score of 46 in 2013, improving from 51 in 2007, placing the Kingdom at the far-end of inequality compared to most other G-20 economies, but in line 50 with other emerging markets.
CDSI released its labor force survey for 2014, showing that overall unemployment rate was unchanged at 11.7 percent with slight declines to both male and female unemployment.
However, the data showed that more females entered the labor force across all age groups. Annual growth in employment of Saudis stood at 4.4 percent, with most of the growth stemming from the private sector.
In 2014, Saudi employment growth stood at 4.4 percent, year-on-year, which was mostly associated with private rather than public entities. This has also resulted in an improvement to their Saudization rates, according to the chart book.
Month-on-month bank lending to the private sector fell for the second consecutive month, but sustained positive, double digit annual growth.
Within the private sector, commerce and manufacturing have been the main recipients of new lending during 2014.
The continued monthly fall in lending coupled with sustained growth in deposits has caused the loan-to-deposit ratio to further decline to 79.4.
Data for December shows that CPI slowed for the fourth consecutive month to percent, year-on-year. Both foodstuffs and housing components continued to slow, year-on-year, for the third consecutive month to reach 2.6 percent, and 2.5 percent respectively. Foodstuffs slowed as international food prices continued to decline at a faster rate.
Nonoil exports rebounded in November following a fall in the previous month, increasing by 9.5 percent, month-on-month, but stayed unchanged in year- on-year terms at 0.3 percent while imports grew by 11.2 percent, month-on- month and 4.6 percent year -on-year.
New LOCs opened suggest a continued increase in import activity in upcoming months, said the Jadwa report.
Oil prices dropped again in January due to no slow down in supply and demand remaining subdued. The combination of ample supply and the oil price forward curve moving into contango resulted in steep increases in commercial stocks. US land oil rigs dropped by 202, month-on-month, in January, the largest monthly drop in six years.
Saudi oil production averaged 9.6 million bpd in December.
Latest data shows that Saudi oil exports in November increased, month-on-month, to back above 7m bpd, which was last achieved in April 2014.
The Tadawul All-Share Index (TASI) rose by nearly 7 percent, month-on-month, in January after four consecutive months of falls, resulting in the TASI outperforming most comparative benchmarks, aside from China. Retail sectors in particular will see better performance in the next few months, said the report.
Average daily turnover declined 8 percent in January, month-on- month. Banks and insurance sectors dominated daily turnover but turnover was more prominent amongst the smaller sectors, when considering market capitalization, largely due to speculative activity.
All sectors, except telecoms, were up in January. Smaller sectors benefited most from renewed investor confidence. Telecoms, energy and retail were affected by below par results in Q4 2014.
Net income of listed companies totaled SR114.7 billion in 2014, up by 9 percent, year-on-year.
Banks were the stand out performers with the largest increase in net income, year-on-year, up SR10 billion, whilst telecoms losses amounted to nearly SR5 billion, year-on-year.
Net income was up 9.2 percent year-on-year, but quarter-on-quarter was down 38 percent, due to losses in petchems, telecom and energy sectors.
Of the larger sectors, petchems and telecoms profit fared the worst in 2014, year-on-year, resulting in their contribution to profits among all listed companies declining.