SABB/HSBC PMI Index: expansion continues in non-oil sector
The Saudi British Bank ‘SABB’ has published the results of the headline SABB/HSBC Saudi Arabia Purchasing Managers’ Index (PMI) for May 2014 – a monthly report issued by SABB and HSBC. It reflects the economic performance of Saudi Arabian non-oil producing private sector companies through monitoring a number of variables, including output, orders, prices, stocks and employment.
Survey participants indicated the continued expansion of the Saudi Arabian non-oil producing sector. After accounting for seasonal factors, the headline PMI recorded 57.0, down from 58.5 in April, to signal another month of strong growth, but at a rate that matched March’s recent rate of growth.
The small slip in the PMI largely emanated from a drop in the rate of new order growth in May. Latest data showed that new business rose at a slower rate, with sales from abroad increasing at a much weaker pace. Nonetheless, total new order growth remained strong and overall demand firm. There were reports that marketing and considerable efforts by private sector sales staff had supported the latest net rise in new business.
Companies continued to respond to growth of new work by increasing output at their units, with the latest growth the sharpest seen for three months. Not only did firms seek to deal with increased new business volumes, but also worked on existing contracts. Backlogs of work increased during May at the sharp rate as well.
Despite evidence of capacity constraints at their units, Saudi Arabia’s non-oil producing private sector companies were careful in increasing their net hiring. The employment was up for a second successive month (with workers recruited to deal with increased workloads), but the net rise in payroll numbers was marginal.
Survey participets in the SABB/HSBC Saudi Arabia PMI Index signalled some optimism for growth by continuing to increase their purchasing activity. May’s survey indicated the sharpest rise in input buying for six months, with companies not only buying goods to service current workloads but also to boost inventories. Latest data showed that stocks of purchases continued to build in May but at a slower rate.
A low increase in average input prices reduced the pressure on companies to raise their own charges in May, with companies offering a slight net discount for the first time in nine months.