Growth in Saudi Arabia’s nonoil business activity accelerated last month to a three-month high, a survey showed, while output growth rose at the fastest rate since April.
The Saudi British Bank (SABB) has published the results of the headline SABB HSBC Saudi Arabia Purchasing Managers’ Index (PMI) for December 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.
The headline PMI rose from 57.1 in November to 58.7 in December, signaling a further improvement in operating conditions in Saudi Arabia’s nonoil producing private sector.
The latest improvement was the best for three months.
December data signaled a sharp rise in activity at Saudi Arabia’s nonoil producing private sector firms, with the pace of expansion the highest in eight months.
Exactly 29 percent of panelists reported output growth, while only 5 percent indicated a decline.
New orders also increased at a quicker pace, with companies commenting on higher construction activity, increased infrastructure developments and good marketing efforts.
Meanwhile, client demand from foreign markets strengthened to a lesser extent than seen in previous months.
In line with the trends for output and new orders, staffing levels in Saudi Arabia’s nonoil producing private sector continued to rise in December.
Although modest overall, the rate of job creation was the highest since March. This was largely the result of higher workloads.
Overall input costs rose further in December, with around 18 percent of companies reporting higher cost burdens.
While the rate of purchase price inflation was broadly unchanged from November, staff costs rose at the quickest pace in over a year-and-a-half.
Some panel members attributed higher salaries to increased living expenses. In response to increased input costs, companies raised their selling prices. Charge inflation was the highest in 10 months, although modest overall.
Work-in-hand rose further in December, as companies struggled to process sharp inflows of new business.
Backlogs of work accumulated for an eleventh month running, and at one of the sharpest rates in the survey history.
Meanwhile, vendor performance improved further. Companies reported that faster delivery times had been agreed with suppliers, in order to meet higher production requirements.
As has been the case throughout the 53-month survey history, Saudi Arabia’s nonoil producing private sector companies reported a rise in purchasing activity in December.
Anecdotal evidence suggested that the increase in buying was driven by higher new business.
The latest survey results signaled a rise in input stocks at Saudi Arabian non-oil producing private sector firms, with the rate of accumulation down only fractionally since November.