Saudi non-oil activity edges down in Jan
Riyadh, February 4, 2013
The healthy growth rate of business activity in Saudi Arabia's non-oil private sector eased slightly in January, a survey showed on Monday.
The SABB HSBC Saudi Arabia Purchasing Managers' Index slipped to a seasonally adjusted 58.1 points last month from 58.9 in December, staying well above the 50-point mark that separates expansion from contraction.
The survey also showed both input price and output price inflation picked up marginally in January, while employment levels continued to rise.
Saudi Arabia's gross domestic product grew 6.8 percent last year, according to preliminary official data; a Reuters poll of analysts last month forecast growth would slow to 4.0 percent this year because of lower projected oil prices.
Output rose at Saudi Arabian non-oil producing private sector companies during January. The rate of growth slowed slightly, but remained marked. Almost 45 per cent of survey respondents indicated an increase in new orders, which was mainly driven by improved economic conditions and good sales team efforts.
New business from abroad increased in January, albeit at the slowest pace in five months, the survey said.
The latest survey data signalled a decrease in work outstanding at non-oil producing firms in Saudi Arabia. Increased capacity helped support the clearance of work-in-hand. Employment levels increased further in January, and the rate of job creation was in-line with the overall series average. An increase in new orders was reported to be the main driver behind the latest rise in payroll numbers.
Output prices at non-oil producing private sector companies rose during January, and at a slightly sharper rate than in December. The rise in output prices was linked to higher input costs and increased market demand.
Overall input prices rose during January, while the rise in purchase prices was driven by higher raw material prices and general economic pressures. Panelists also reported higher average staff costs. This was linked to the hiring of additional employees.
January data signalled a rise in purchasing activity at Saudi Arabian non-oil producing private sector firms, and the rate of growth was higher than in the previous survey period. Almost one-in-three respondents indicated an increase in buying, while only 6 per cent recorded a decrease. Stocks of purchases continued to increase during January. There was some evidence that growth was driven by expectations of an increase in new orders and production over the coming months.
Meanwhile, suppliers’ delivery times continued to shorten. Only 2 per cent of companies reported a worsening in vendor performance, while 12 per cent indicated an improvement. According to anecdotal evidence, the shortening of suppliers’ delivery times was partly due to improved payment schedules.
The SABB HSBC Saudi Arabia Purchasing Managers' Index is a monthly report issued by the bank and HSBC. It reflects the economic performance of the Saudi Arabian non-oil producing private sector companies through the monitoring of a number of variables, including output, orders, prices, stocks and employment. – Reuters & TradeArabia News Service
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