Kingdom’s private sector firms report surge in output, new orders

The Saudi British Bank (SABB) has published the results of the headline SABB/HSBC Saudi Arabia Purchasing Managers’ Index (PMI) for February 2013, a monthly report issued by the bank and HSBC. It reflects the economic performance of the Saudi nonoil producing private sector companies through the monitoring of a number of variables, including output, orders, prices, stocks and employment.
February data pointed to a further improvement in operating conditions at nonoil producing private sector companies in Saudi Arabia. The headline PMI posted 58.5, up from 58.1 in January. Output and new order growth remained solid and employment levels continued to rise. Meanwhile, purchasing activity increased at a sharp rate.
Nonoil producing private sector firms in Saudi Arabia reported both higher output and increased new orders in February. While the rise in output was mainly driven by more new business and improving market conditions, the rise in new orders was attributed to marketing and sales efforts within companies. Moreover, the rate of growth in new work was sharp and higher than in the previous survey period. New export orders also continued to increase.
Employment levels at nonoil producing private sector firms rose further during February. According to anecdotal evidence, new business was the main reason for an increase in payroll numbers.
Backlogs of work at nonoil producing private sector firms in Saudi Arabia increased during February. While the rate at which backlogged work accumulated was only slight, survey data signaled the first increase in work-in-hand since October 2012. Meanwhile, suppliers’ delivery times continued to improve, but at the weakest rate in 11 months.
The latest survey data pointed to higher prices charged by Saudi nonoil producing private sector companies. Increased input costs were commonly mentioned by companies that reported a rise in output prices.
Overall input prices also rose during February, and the rate of input cost inflation was broadly unchanged from January. Around 11 percent of companies recorded higher input costs and only 2 percent reported a fall. While the rate of purchase price inflation picked up, wage inflation fell to a 16-month low.
Purchasing activity increased during the latest survey period in Saudi Arabia’s nonoil producing private sector. Around 35 percent of panelists reported an increase in quantity of items purchased, while less than 9 percent indicated a fall.
Stocks of purchases also rose. The rate of growth was broadly unchanged from January and remained above the series average. There was some evidence that expectations of more new business partly led to the accumulation of stocks of purchases.