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Mon 5 Nov 2012 05:33 PM

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Saudi private sector growth slows in Oct

Business activity tracker in Gulf kingdom falls from four-month high in September

Saudi private sector growth slows in Oct
Saudi money, Saudi currency, Saudi economy, Saudi finance, GCC currencies

Growth of business activity in Saudi Arabia's non-oil private sector fell slightly in October from a four-month high, a survey of over 400 private companies showed on Monday.

The SABB HSBC Saudi Arabia Purchasing Managers' Index, which measures activity in the manufacturing and services sectors, was 59.8 points last month compared to 60.3 points in September.

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

Underpinning the latest improvement in operating performance were further increases in both output and new business, the survey showed.

Rates of expansion slowed marginally from recent highs, but remained substantial and above survey averages.

Companies reported that the domestic market remained the prime source of new orders, reflecting improving sentiment and successful marketing initiatives.

Levels of new export business also continued to rise in October, despite signs of slower growth of the global economy in recent months. Survey respondents mainly linked improved foreign demand to gains in new business from within the GCC.

Strong growth of new business increased the pressure on capacity in the non-oil producing sector. This was highlighted by a series-record increase in levels of work-in-hand (but not yet completed) in October. Subsequently, companies increased employment for the 13th successive month.

The survey also showed that average selling prices rose for the second successive month and at the fastest rate since June 2011. There were also reports of charges being raised in line with higher input costs.

Overall, input prices posted a further increase during the latest survey period, reflecting higher staff costs and purchase prices.

Average wages and salaries were only moderately higher than in September, with the vast majority of companies reporting no change.

Purchasing activity rose sharply in October, continuing a trend observed throughout the survey history. Companies raised input buying volumes in response to increases in business activity and incoming new work.

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