Business activity tracker in Gulf kingdom declines from previous month but growth still strong
Growth of business activity in Saudi Arabia's non-oil private sector dipped to a five-month low in April, a survey of more than 400 private companies has showed.
The SABB HSBC Saudi Arabia Purchasing Managers' Index, which measures activity in the manufacturing and services sectors, stood at 58 points last month compared to 58.9 points in March.
The seasonally adjusted index remains well above the 50-point mark separating growth from contraction.
It reflects the economic performance of the Saudi Arabian non-oil producing private sector companies through the monitoring of a number of variables, including output, orders, prices, stocks and employment.
While the April survey data marked the lowest reading in five months, the rate of improvement remained sharp.
Output levels continued to increase at a solid pace in April, with 31 percent of respondents indicating a rise in production.
Respondents linked the expansion to improving market conditions and increased incoming new business.
Driven by improved marketing efforts, order book volumes rose during the latest survey period.
The rate of growth moderated slightly from March, but remained sharp. New business from abroad also rose at a slightly weaker rate than in the previous survey period.
Non-oil producing private sector companies in Saudi Arabia indicated a third successive monthly increase in levels of outstanding business.
Increased new orders was cited as the main reason for the rise in work-in-hand. Meanwhile, vendor performance improved at the sharpest rate in four months.
Overall input costs continued to increase during the latest survey period, but the rate of cost inflation eased slightly from March.
While an increase in purchase prices was driven by general inflationary pressures, average staff costs were broadly unchanged from the previous month.
Output prices charged by Saudi Arabian non-oil producing private sector companies rose moderately in April, as the majority of respondents indicated unchanged charges from the previous month. Where higher charges were reported, panellists commonly commented on increased input costs.
Purchasing activity increased further during April, as 35 percent of companies recorded a rise in the quantity purchased. According to anecdotal evidence, the rise was encouraged by increased incoming new business volumes.