JEDDAH: Fresh data indicate a robust improvement in business conditions at Saudi Arabia’s nonoil private sector companies.

The Saudi British Bank (SABB) has published the results of the headline SABB HSBC Saudi Arabia Purchasing Managers’ Index (PMI) for May 2015 – a monthly report issued by the bank and HSBC.

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

Despite falling from 58.3 in April to 57.0 in May, the headline PMI was indicative of another robust improvement in business conditions at Saudi Arabian nonoil private sector firms.

That said, the latest reading was the lowest since May 2014 and below the average observed over nearly six years of data collection.

The overall slowdown was reflective of weaker growth in output and new business during May.

The latest expansion in activity was the least marked in four months and below the long-run trend.

Likewise, new orders rose more slowly in May.

Despite remaining strong overall, the rate of increase eased to the weakest since September 2011.

Anecdotal evidence linked higher new work inflows to deliberate sales efforts and improving market conditions.

Companies in Saudi Arabia also reported a slower expansion in new export orders during May.

The rate of growth eased to an 11-month low, although remained broadly similar to the historical average.

Panel members generally associated higher exports with robust demand in key foreign markets.

The rate of job creation in Saudi Arabia’s non-oil private sector slowed to a relatively weak pace in May, mirroring the trends observed for output and new orders.

Companies that raised employment commented on the start-up of new projects and the opening of new branches.

Stronger order books and increased business requirements led to a further rise in purchasing activity.

The respective index remained comfortably in growth territory, and was consistent with a robust expansion during May.

Subsequently, growth of input stocks was sustained in the latest period. Average lead times quickened again in May, with the latest shortening the fastest since September 2012.

There were reports that vendors had continued to improve their performance in line with companies’ requirements.

Meanwhile, cost pressures faced by Saudi Arabian nonoil private sector firms intensified in May, with both purchase prices and staff costs rising more quickly than in April. According to panellists, purchasing costs were driven higher by increased raw material prices and greater demand for inputs, while higher living costs were reported to have placed upward pressure on wages.

Output charges also increased in May, reversing the marginal reduction seen in the previous month.

However, the rate of charge inflation was only slight. Companies suggested that higher input costs had outweighed competitive pressures in the latest period.