Saudi private sector growth falls in January

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(Photo for illustrative purpsoes only)

(Photo for illustrative purpsoes only)

Growth of business activity in Saudi Arabia's non-oil private sector fell in January, 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, was 58.1 points last month compared to 58.9 points in December.

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.

The survey showed output and new orders increased solidly but input price increase picked up. Meanwhile, employment levels continued to rise.

Output rose during January but the rate of growth slowed slightly. Almost 45 percent of survey respondents indicated an increase in new orders, which was mainly driven by improved economic conditions and good sales team efforts.

New business from abroad increased in January, albeit at the slowest pace in five months.

The latest survey data signalled a decrease in work outstanding at non-oil producing firms in Saudi Arabia.

Employment levels increased further in January, and the rate of job creation was in line with the overall series average.

An increase in new orders was reported to be the main driver behind the latest rise in payroll numbers.

Output prices at non-oil producing private sector companies also rose during January, and at a slightly sharper rate than in December. The rise in output prices was linked to higher input costs and increased market demand.

Overall input prices rose during January, while the rise in purchase prices was driven by higher raw material prices and general economic pressures.

Panellists also reported higher average staff costs. This was linked to the hiring of additional employees.

January data signalled a rise in purchasing activity at Saudi Arabian firms, and the rate of growth was higher than in the previous survey period.

Almost one-in-three respondents indicated an increase in buying, while only six percent recorded a decrease.

Stocks of purchases continued to increase during January. There was some evidence that growth was driven by expectations of an increase in new orders and production over the coming months.


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