- RIYADH: The Saudi British Bank (SABB) has published the results of the headline SABB HSBC Saudi Arabia Purchasing Managers' Index (PMI) for August 2011 - a monthly report issued by the bank and HSBC.
- It reflects the economic performance of Saudi Arabian nonoil producing private sector companies and establishments through the monitoring of a number of variables, including output, new orders, exports, input prices, output prices, quantity of purchases, stocks and employment.
Although the PMI continued to signal a strong improvement in Saudi Arabian nonoil private sector business conditions in August, at 57.9 (down from 60.0 in July), it was at its lowest level for one-and-a-half years. Behind the latest fall in the headline index were deteriorations in all of its component indices (the suppliers' delivery times index is inverted in the calculation of the PMI). Activity levels increased at the slowest rate in the series history in August as new order growth moderated. The latest rise in new business was the least marked for almost a year. Nevertheless, the index remained at a level indicative of a marked rate of expansion. Panel members stated that higher new order takings were the result of favorable market conditions, successful advertising and company expansions. Backlogs continued to build during the latest survey period as workloads increased. However, the rate of accumulation remained only meager and close to June's recent low. Further growth of new work led Saudi Arabia's nonoil private sector firms to take on additional personnel and build up inventories in August. Both employment and input stocks rose solidly on the month, albeit at slower rates. Staffing increased at the weakest rate for 11 months, while input holdings accumulated at the slowest pace in the series history.Following a marginal deterioration in July, vendor performance improved slightly during August. Respondents indicated that lead times shortened because of a high degree of competition amongst suppliers. However, the vast majority of monitored companies saw no change in average delivery times.Overall input and output price pressures moderated in August to five- and six-month lows respectively. The slowdown in the former reflected weaker rises in both purchasing and staff costs. Purchase prices rose at the mildest pace for nine months, although the rate of increase remained above the series trend. Reports showed that higher raw material prices, partly supported by demand, drove the latest round of inflation.Meanwhile, improved business performance was cited as the main reason for greater salaries and wages.Charges were further raised during August in order to protect profit margins from higher input costs. However, the rate of increase was slower than in July.
