Private industry In Saudi Arabia outside of the oil sector is booming with activity, rising to a level not yet seen as outputs grow, new orders come flowing in and employment strengthens, according to a recent survey.
The PMI (purchasing managers’ index) released by the SABB HSBC Saudi Arabian location looks at the business activity within the members of OPEC, specifically in the manufacturing and service industries. That index climbed from the October 59.9 level to 62.2 points, a figure not seen in the history of the index that began in August of last year.
MENA chief economist at Dubai’s HSBC Bank, Simon Williams noted that those figures are very strong.
Currently the output data is “exceptionally strong” and the analysts are encouraged by the stronger flow of new orders that support a continuing rise in output.
The PMI is adjusted seasonally and has stayed far above the 50 point level – the number that differentiates a pattern of growth from a period of contraction.
Saudi Arabia, the leading global oil exporter, experienced rising output in the private industry during November, recording 71.8 points up from 68.7 points in October. New orders within the Kingdom rose at a rapid rate, the fastest in the past five months, to hit 68.1.
This survey included over 400 private firms and showed that employment in Saudi Arabia rose at a sharp rate in November, the quickest since June, due to increased hiring in response to the new orders.
Unemployment within the Kingdom sits at about 10 percent. The government is focusing on growth through the private sector in a job creation effort aimed at the local population of more than 18 million.
According to the survey, costs for purchases and wages are still on the rise after having slowed down in October, which indicates that inflation may continue to climb.
October’s consumer inflation was recorded at 5.8 percent and is still a concern. After the 18-month high of 6.1 percent seen in August, inflation in Saudi Arabia continues to be the highest in the region.
Williams noted that he sees inflationary pressures building, but also stated that the survey figures indicate the Kingdom is at an early point in the cycle of price growth.Paul Holdsworth, Staff Writer, Gulf Jobs Market News