Saudi private sector growth slows in November

Growth of business activity in Saudi Arabia's non-oil private sector fell in November, a survey of over 400 private companies has showed.

The SABB HSBC Saudi Arabia Purchasing Managers' Index, which measures activity in the manufacturing and services sectors, was 57 points last month compared to 59.8 points in October.

The seasonally adjusted index remains well above the 50-point mark separating growth from contraction.

The private sector in the Gulf kingdom continued to report strong growth in production and new orders but the level of outstanding business fell and the overall rate of input price increases scored its lowest reading in 24 months.

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 non-oil 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.

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 two years.

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.