SABB PMI index signals improvement in nonoil sector

Updated 04 December 2012
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SABB PMI index signals improvement in nonoil sector

The Saudi British Bank (SABB) has published the results of the headline SABB HSBC Saudi Arabia Purchasing Managers’ Index (PMI) for November 2012 — a monthly report issued by the bank and HSBC. It reflects the economic performance of Saudi nonoil producing private sector companies through monitoring a number of variables, including output, orders, prices, stocks and employment.
The Saudi nonoil producing private sector continued to report strong growth in production and new orders, while the level of outstanding business fell and the overall rate of input price increases scored its lowest reading in 24 months. The headline PMI recorded a level of 57.0 in November, down from 59.8 in October.
Output levels rose further in November with more than one out of four respondents reporting an increase in production. According to anecdotal evidence, one of the main reasons behind the rise was higher new orders. More than 40 percent of the panelists surveyed indicated an increase in the level of orders received and linked this to good market conditions. The rate of growth was, however, the lowest since September 2011.
The level of new export orders received at non-oil producing firms in Saudi Arabia continued to rise during November. Meanwhile, the level of outstanding business decreased for the first time in four months. The clearing up of pending orders was often mentioned as the primary factor highlighted by firms that reported lower levels of outstanding business.
Employment levels rose for the 14th successive month in November, and at a higher rate than in the previous month. Where an expansion of workforce numbers was reported, respondents linked this to increased business requirements. Companies increased salaries in November and partly attributed this to higher living costs.
Average lead times at nonoil producing firms in Saudi Arabia shortened in November, at a slightly stronger rate than in October with almost 20 percent of the respondents reporting an improvement in suppliers’ delivery times. Mainly driven by increased purchase prices, average tariffs charged for goods rose compared with the situation in October.
The rate of purchase price increases eased in November and scored its joint-lowest reading since July 2010. Hand-in-hand with slower purchase price inflation, the Overall Input Prices Index recorded its lowest level in 24 months.
Driven by an increase in new orders, purchasing activity rose in November and led to solid growth in inventory holdings. More than one-in-three respondents indicated an increase in their quantity of items purchased.


Saudi Arabia, Russia and China give EU trade reforms thumbs down at WTO

Updated 37 min 4 sec ago
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Saudi Arabia, Russia and China give EU trade reforms thumbs down at WTO

  • China is suing US and EU at WTO
  • Kingdom warns new rules are concerning

The EU’s new rules against countries dumping cheap goods on its market got a rough ride at a World Trade Organization meeting, where China, Russia and Saudi Arabia led a chorus of disapproval, a trade official said on Thursday.

The EU, which is in a major dispute with China about the fairness of Chinese pricing, introduced rules last December that allow it to take into account “significant distortions” in prices caused by government intervention.

A Chinese trade official told the WTO’s anti-dumping committee that Beijing had deep concerns about the new methodology, saying it would damage the WTO’s anti-dumping system and increase uncertainty for exporters, an official who attended the meeting said.

China argued that the concept of “significant distortion” did not exist under WTO rules, and the EU should base its dumping investigations on domestic prices in countries of origin, such as China.

The EU reformed its rules in the hope they would allow it to keep shielding its markets from cheap Chinese imports while fending off a Chinese legal challenge at the WTO.
China said that when it joined the WTO in 2001, the other member countries agreed that after 15 years they would treat it as a market economy, taking its prices at face value.

But the US and the EU have refused, saying China still subsidises some industries, such as steel and aluminum, which have massive overcapacity and spew vast supplies onto the world market, making it impossible for others to compete.

China is suing both the US and the EU at the WTO to try to force them to change their rules.

Legal experts say the dispute is one of the most important in the 23-year history of the WTO, because it pits the major trading blocs against each other with fundamentally opposing views of how the global trade rules should work.

In the WTO committee meeting, Saudi Arabia said the new rules were very concerning, and it challenged the EU to explain how EU authorities could ensure a fair and objective assessment of “significant distortion.”

Russia said the EU rules violated the WTO rulebook and certain aspects were unclear and created great uncertainty for exporters. Bahrain, Argentina, Kazakhstan and Oman also expressed concerns.

But a US trade official said the discussion showed that appropriate tools were available within the WTO to address distortions affecting international trade.