SABB PMI index signals improvement in nonoil sector

The Saudi British Bank (SABB) has published the results of the headline SABB HSBC Saudi Arabia Purchasing Managers’ Index (PMI) for November 2012 — a monthly report issued by the bank and HSBC. It reflects the economic performance of Saudi nonoil producing private sector companies through monitoring a number of variables, including output, orders, prices, stocks and employment. The Saudi nonoil producing private sector continued to report strong growth in production and new orders, while the level of outstanding business fell and the overall rate of input price increases scored its lowest reading in 24 months. The headline PMI recorded a level of 57.0 in November, down from 59.8 in October. Output levels rose further in November with more than one out of four respondents reporting an increase in production. According to anecdotal evidence, one of the main reasons behind the rise was higher new orders. More than 40 percent of the panelists surveyed indicated an increase in the level of orders received and linked this to good market conditions. The rate of growth was, however, the lowest since September 2011. The level of new export orders received at non-oil producing firms in Saudi Arabia continued to rise during November. Meanwhile, the level of outstanding business decreased for the first time in four months. The clearing up of pending orders was often mentioned as the primary factor highlighted by firms that reported lower levels of outstanding business. Employment levels rose for the 14th successive month in November, and at a higher rate than in the previous month. Where an expansion of workforce numbers was reported, respondents linked this to increased business requirements. Companies increased salaries in November and partly attributed this to higher living costs. Average lead times at nonoil producing firms in Saudi Arabia shortened in November, at a slightly stronger rate than in October with almost 20 percent of the respondents reporting an improvement in suppliers’ delivery times. Mainly driven by increased purchase prices, average tariffs charged for goods rose compared with the situation in October. The rate of purchase price increases eased in November and scored its joint-lowest reading since July 2010. Hand-in-hand with slower purchase price inflation, the Overall Input Prices Index recorded its lowest level in 24 months. Driven by an increase in new orders, purchasing activity rose in November and led to solid growth in inventory holdings. More than one-in-three respondents indicated an increase in their quantity of items purchased. From : Arabnews