At 61.3 in December, the headline index was down slightly from November's series record high of 62.2. Nevertheless, the latest reading signaled another considerable gain in the health of the Saudi Arabian nonoil private sector. Moreover, the rate of the improvement remained above the series trend.
Activity levels continued to grow in the final month of the year. Although the rate of increase moderated slightly from November's peak, it was nonetheless sharp. Anecdotal evidence showed that output was raised to accommodate another inflow of new business.
New order receipts increased at a substantial rate during December as market conditions improved. A combination of promotional work, good business reputations and company expansions also helped stimulate demand. Although export growth picked up sharply on the month, data suggested that the domestic market remained the principal driver of total new order expansion.
In order to keep output growth in line with the upward trend in demand, Saudi Arabian nonoil private sector firms took on new staff raised buying activity and built up inventories in December. Both employment and input stocks increased markedly, while purchases rose considerably. Even so, supplier performance continued to improve, which panelists linked to strong competition amongst vendors and prompt payment for goods received.
Another expansion of new work led to a build up of backlogs during December. Outstanding business accumulated solidly, albeit to a lesser extent than over the previous two survey periods.
Total input price inflation accelerated to a series record pace at the end of the fourth quarter, driven by steeper rises in both purchasing and staff costs. The former increased at a sharp and accelerated pace that was a new series record. Reports linked greater purchasing costs to higher raw material prices, which resulted from greater market demand and unfavorable exchange rates. Meanwhile, employee payments increased at a moderate rate that was the most marked since May.
