Growth in business activity in Saudi Arabia's non-oil private sector hit a nine-month high in April 2012, boosted by strong output and new orders, as per SABB/HSBC Saudi Arabia Purchasing Managers' Index (PMI).
The Index, which measures activity in the manufacturing and services sectors, rose to 60.42 in April 2012 from 58.73 in March 2012. The seasonally adjusted index stayed well above the 50-point mark distinguishing growth from contraction. This month’s result was the highest reading for nine months, and signaled another marked improvement of operating conditions across the Saudi non-oil private sector.
New order growth was the highest since June 2011 and reached at 70.13 points in April 2012 against 66.87 in March 2012. Respondents commented on improved demand conditions and more business stemming from government contracts, adding that the domestic market remained a key driver for new order growth.
To accommodate gains in new business, the Saudi non-oil private sector firms raised output during April. Output growth levels also climbed, reaching 65.20 in April 2012 from 62.68 in March 2012. The employment index rose sharply to 55.76 in April 2012 from 52.46 in March 2012.
With new order growth continuing to outstrip the expansion in output, levels of unfinished business continued to build at the non-oil private sector companies.
Cost inflation accelerated during April to a new survey record, pushed up by higher purchasing prices for raw materials and fuel, as well as higher staff costs. To protect profit margins, and in light of strong demand, non-oil private sector firms increased their own tariffs. In order to keep up with rising business requirements, companies raised both employment and purchases during April. Job creation was the most marked for nearly a year, while buying activity increased at a joint series-record pace.
Bank Audi – The MENA Weekly Monitor