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Non-Oil Private Industry Growing Strongly According to PMI

Saudi Arabia : 04 January 2011

The recent release of the SABB (Saudi British Bank) HSBC Saudi Arabia PMI (Purchasing Managers’ Index) for December has been announced. This monthly report is jointly issued by the HSBC and the SABB. The PMI analyses the economic performance of Saudi Arabia’s private sector that is non-oil related, including the outputs, exports, fresh orders, output and input prices, Saudi employment, stocks and the quantity of purchases within related business and organizations.

This headline index registered at 61.3 for December, which is a slight drop from the record high seen in November, when the PMI sat at 62.2. Despite the decline, this reading indicates that the non-oil private industry in Saudi Arabia is robust and healthy. Also, improvement was still higher than the series trend.

Levels of activity were on the rise through the last month of 2010. Even though the increase was slightly below the height reached in November, it was still impressive. Subjective evidence indicated that output rose to account for more fresh business flowing in.

Receipts for fresh orders rose at a strong rate in December with improved market conditions. Promotions, solid business reputation and expansions in various companies were part of the stimulated demand. Even though exports rose substantially in December, the figures indicated that domestic markets were the main driver in overall fresh order expansion.

To allow the growth of output to keep up with the climbing demand the non-oil private industry businesses in Saudi Arabia hired more staff, increased buying activities and stocked up inventory throughout December. Input stocks and employment rose noticeably and purchasing climbed substantially.  Despite this, the performance of suppliers still improved due to the strong vendor competition and shortened payment wait times for goods, according to panelists.

December also saw a backlog building as new business expanded.  Outstanding business saw solid accumulation, although to a lesser extent than was seen in the two previous survey time periods.

Inflation in input prices grew at a record rate at the close of the fourth quarter, due to strong increases in staffing and purchasing costs.  Purchasing costs rose sharply and quickly, another record in the series.  Higher costs in this area were a result of the rising price of raw materials, thanks to higher market demand and poor exchange rates.  At the same time, payments to employees rose moderately and at the fastest rate seen since May.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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