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  • SABB PMI points to further improvement in private sector business conditions during June

    July 2012


    The Saudi British Bank “SABB” has published the results of the headline SABB HSBC Saudi Arabia Purchasing Managers’ Index™ (PMI™) for June 2012 – a monthly report issued by the bank and HSBC. It reflects the economic performance of Saudi Arabian non-oil producing private sector companies through the monitoring of a number of variables, including output, orders, prices, stocks and employment.

    The Saudi Arabian non-oil private sector continued to show considerable resilience in the face of a global economic slowdown in June, with output, new orders and employment all up at rates little-changed from one month previously. Cost pressures meanwhile also remained relatively stable.

    The month of June saw the seasonally adjusted SABB HSBC Saudi Arabia Purchasing Managers’ Index™ (PMI™) dip from 60.4 in May to 59.7, signaling a further, albeit slightly slower, improvement in overall operating conditions across the KSA non-oil private sector economy.

    Total output levels increased at a marginally faster rate in June, albeit one that was still below the average recorded since data collection started almost three years ago. Anecdotal evidence linked the rise in activity to improving economic conditions, particularly in the domestic market, and an associated rise in incoming new orders.

    June data showed a further marked rise in total new work placed with non-oil private sector business in Saudi Arabia, which survey respondents partly attributed to greater efforts in the areas of marketing and sales. New export orders also increased on the month.

    Purchasing activity followed a similar trend in June, increasing at a marked rate. Anecdotal evidence showed that firms increased input buying to satisfy rising output requirements, but also to accumulate pre-production stocks. Indeed, stocks of purchases were built at a rate that was only fractionally down on May’s 12-month record. Suppliers’ delivery performance meanwhile continued to improve in spite of the increased demand for inputs.

    Employment levels rose for the ninth successive month during June. Where job creation was recorded, this was linked by respondents to increases in current and expected workloads.

    Overall input cost inflation facing KSA private sector companies was broadly unchanged since the preceding survey period, and strong by the historical standards of the series. Output prices were raised as a result, though the rate of inflation was the weakest for four months amid stronger competitive pressures.


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