New firms boost Saudi business activity
Jeddah, September 3, 2012
Growth of business activity in Saudi Arabia's non-oil private sector rose slightly in August from a seven-month low in July on increasing new business, a survey of over 400 private companies published on Monday showed.
The SABB HSBC Saudi Arabia Purchasing Managers' Index, which measures activity in the manufacturing and services sectors, was 58.31 points in August against 58.09 in July. The seasonally adjusted index remains well above the 50-point mark separating growth from contraction.
New order growth increased in August to 68.66 points from 66.27 in July. "A number of firms commented on improved market conditions and greater efforts made by sales teams," the survey said.
But employment growth slowed in August, to its slowest pace in five months. Output growth stayed strong but also slowed.
Growth of overall input prices climbed to 56.64 points from 55.75, while output price growth fell sharply to 48.48 from 51.59, recording the first sub-50 level since data collection started over three years ago - potentially indicating downward pressure on corporate profit growth.
The survey said competitive pressures had prompted some firms to lower their selling prices, but noted that the overall decrease was marginal with 84 percent of companies charging the same prices as they did in the previous month.
Analysts predicted, in a Reuters poll conducted in July, that Saudi Arabia's gross domestic product would expand 5.2 percent this year, after a revised 7.1 percent last year. - Reuters