According to the SABB/HSBC Saudi Arabia Purchasing Managers’ Index (PMI), an indicator of the economic performance of non-oil producing private sector companies, activity sustained a strong momentum in October 2012 despite reporting a slight slowdown on a monthly basis.
Indeed, the seasonally adjusted SABB HSBC Saudi Arabia PMI was at 59.8 in October, slightly down from September’s four-month high of 60.3.
Underpinning the latest improvement in operating performance were further increases in both output and new business. Rates of expansion slowed marginally from recent highs, but nonetheless remained substantial and above 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 thirteenth successive month. The rate of jobs growth was solid, but slower than in the previous month.
Increased demand for their products and services improved the pricing power of Saudi Arabian non-oil producing companies in October. Average selling prices rose for the second successive month and at the fastest rate since June 2011.
Mena Weekly Monitor – Bank Audi's Group Research Department