Growth of Saudi Arabia’s Private Sector Accelerates in August
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The Saudi British Bank “SABB” has published the results of the headline SABB/HSBC Saudi Arabia Purchasing Managers’ Index™ (PMI™) for August 2013 – a monthly report issued by the bank and HSBC. 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 latest survey data signalled a further improvement in operating conditions at Saudi Arabia’s non-oil producing private sector firms. The headline PMI rose to a four-month high of 57.5 in August, up from July’s 56.6. Operating conditions have improved in every month of the survey history to date.
Output rose at an accelerated pace in August, as 22% of survey respondents reported higher activity. Increased business was repeatedly mentioned as the main driver of the latest expansion. In line with stronger output growth was a solid rise in order intakes. The latest increase was partly driven by improved market conditions, and increased marketing and sales efforts. Growth was the sharpest since April. Meanwhile, client demand from foreign markets also strengthened.
Driven by higher purchase prices and increased staff costs, input prices in Saudi Arabia’s non-oil producing private sector increased at a sharp rate. According to anecdotal evidence, the rise in purchase prices was partly attributed to general economic pressures and increased market demand.
In contrast to an accelerated increase in input costs, Saudi Arabia’s non-oil producing private sector companies lowered their charges in response to increased market competition. Selling prices fell for the second month in succession, and at the second-sharpest rate in the 49-month series history.
As has been the case for most of the survey history to date, employment levels rose in August. Companies that hired additional workers often commented on higher production requirements.
Backlogs of work accumulated at the fastest pace in a year-and-a-half in August, with almost 12% of panel members indicating higher volumes of unfinished work. Panellists linked the rise in incomplete orders to higher business.
The SABB/HSBC Index signaled an increase in sales, which was the main driver for the latest rise in purchasing activity at Saudi Arabia’s non-oil producing private sector companies. The latest rate of increase was in line with that seen in July. Concurrently, stocks of purchases accumulated at the weakest pace since December 2011, with the vast majority of survey respondents indicating unchanged inventory levels.
Suppliers’ delivery times shortened again in August. Survey respondents often linked the improvement to increased market competition.
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Saudi Awwal Bank, a listed joint stock company, incorporated in the Kingdom of Saudi Arabia, with paid in capital of SAR 20,547,945,220, commercial registration certificate 1010025779, unified number 7000018668, Mailing Address: P.O. Box 9084, Riyadh 11413. National Address: 7383 King Fahad Branch Rd, 2338 Al Yasmeen Dist., 13325 Riyadh, Kingdom of Saudi Arabia, Tel. +966 11 4050677, www.sab.com, licensed pursuant to the Council of Ministers Resolution No. 198 dated 06/02/1398H and Royal Decree No. M/4 dated 12/08/1398H, and regulated and supervised by the Saudi Central Bank.