SABB-HSBC PMI Index in February
Both output and new order growth remained strong.
Job creation was solid.
Purchasing cost picked up to new series record high.
The Saudi British Bank "SABB" has published the results of the headline SABB HSBC Saudi Arabia Purchasing Managers' Index™ (PMI™) for February 2011 - a monthly report issued by the bank and HSBC. It reflects the economic performance of Saudi Arabian non-oil producing private sector companies and firms through the monitoring of a number of variables, including output, new orders, exports, input prices, output prices, quantity of purchases, stocks and employment.
Business conditions in the KSA non-oil private sector remained favourable in February, supporting further strong expansions in new business and activity, as well as continued growth of employment. However, input prices picked up to a series record peak.
The headline PMI registered 63.4 in February, fractionally below January's record of 63.8. The latest figure pointed to another sharp improvement in the health of Saudi Arabia's non-oil private sector.
Receipts of new work continued to grow in February, and at a considerable rate. Respondents stated that improved market conditions, and competitive prices helped to support demand for the sector's goods and services. However, the rate of increase eased since January. New export orders rose at a weaker rate than total new business, suggesting that domestic demand remained the key driver of expansion.
To keep up with rising new order levels, KSA non-oil private sector companies took on additional staff, increased purchasing and built up stocks in February. The rate of job creation was solid and little-changed since January, while both buying activity and input holdings grew strongly (albeit to lesser extents than in the previous month). Reports indicated that some input purchases were made to hedge against future commodity price inflation.
Lead times on deliveries of raw materials and semi-finished goods shortened again in February. Vendor performance has improved in each month of the survey's history. Panellists linked faster deliveries to competition amongst suppliers and efficient service.
Maintaining the series trend, prices paid for inputs by Saudi Arabian non-oil private sector firms rose in February. Moreover, the rate of input prices picked up to a series record pace. Anecdotal evidence highlighted greater fuel and raw material costs, as well as unfavourable exchange rates, as the principal drivers of inflation.
To motivate staff in the face of rising workloads and increased living costs, companies raised wages and salaries during the latest survey period. Staff cost inflation rose to a modest pace as a result.
In order to compensate for input price inflation, and also to take advantage of strong market demand, firms raised their tariffs in February. Charges increased at a moderate pace, but to a lesser extent than in January.
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© Press Release 2011
