Growth in nonoil private business activity in Saudi Arabia accelerated to a four-month high in August with both output and new orders up, according to a monthly report issued by the The Saudi British Bank (SABB) and HSBC.

SABB published the results of the headline SABB/HSBC Saudi Arabia Purchasing Managers’ Index (PMI) for August 2013 as part of this report.

It reflects the economic performance of the Saudi Arabian nonoil producing private sector companies through the monitoring of a number of variables, including output, orders, prices, stocks and employment.

The latest survey data signaled a further improvement in operating conditions at Saudi Arabia’s nonoil producing private sector firms.

The headline PMI rose to a four-month high of 57.5 in August, up from July’s 56.6. Operating conditions have improved in every month of the survey history to date.

Output rose at an accelerated pace in August, as 22 percent of survey respondents reported higher activity.

Increased business was repeatedly mentioned as the main driver of the latest expansion.

In line with stronger output growth was a solid rise in order intakes.

The latest increase was partly driven by improved market conditions, and increased marketing and sales efforts.

Growth was the sharpest since April.

Meanwhile, client demand from foreign markets also strengthened.

Driven by higher purchase prices and increased staff costs, input prices in Saudi Arabia’s nonoil producing private sector increased at a sharp rate. According to anecdotal evidence, the rise in purchase prices was partly attributed to general economic pressures and increased market demand.

In contrast to an accelerated increase in input costs, Saudi Arabia’s nonoil producing private sector companies lowered their charges in response to increased market competition.

Selling prices fell for the second month in succession, and at the second-sharpest rate in the 49-month series history.

As has been the case for most of the survey history to date, employment levels rose in August. Companies that hired additional workers often commented on higher production requirements.

Backlogs of work accumulated at the fastest pace in a year-and-a-half in August, with almost 12 percent of panel members indicating higher volumes of unfinished work.

Panelists linked the rise in incomplete orders to higher business.

The SABB/HSBC Index signaled an increase in sales, which was the main driver for the latest rise in purchasing activity at Saudi Arabia’s nonoil producing private sector companies.

The latest rate of increase was in line with that seen in July. Concurrently, stocks of purchases accumulated at the weakest pace since December 2011, with the vast majority of survey respondents indicating unchanged inventory levels.

Suppliers’ delivery times shortened again in August.

Survey respondents often linked the improvement to increased market competition.