Overall operating conditions in Saudi Arabia’s non-oil private sector improved in July with increased output, but the rate of expansion decelerated for the third month running, a report said.

Nevertheless, the overall expansion remained sharp, with 24 per cent of companies reporting activity growth, according to the headline SABB/HSBC Saudi Arabia Purchasing Managers’ Index (PMI) for July, a monthly report issued by the bank and HSBC.

The index reflects the economic performance of the Saudi Arabian non-oil producing private sector companies through the monitoring of a number of variables, including output, orders, prices, stocks and employment.

New order intakes also rose solidly, with study participants linking the increase to improving sales team efforts and good economic conditions. The rate of expansion was up slightly, while demand from export markets rose at a slowest pace.

Driven by increased new business, workforce numbers and levels of unfinished work rose in July, the index said.

While the rate of job creation accelerated to the sharpest since March, backlogs of work accumulated at the slowest pace in four months. Concurrently, vendor performance improved, as faster delivery times had been agreed with suppliers to meet business requirements. Around 7 per cent of respondents reported better delivery times, while only 1 per cent indicated a worsening.

Overall input prices in Saudi Arabia’s non-oil producing private sector increased further in July, with the rate of cost increases broadly unchanged from the previous month. Survey respondents linked higher purchase prices to general economic pressures and increased raw material prices.

While input costs continued to rise, non-oil producing private sector companies in Saudi Arabia lowered their charges for the first time since last August, albeit only marginally. Increased market competition was the primary factor for the fall in selling prices, according to study panelists.

Buying activity in Saudi Arabia’s non-oil producing private sector increased markedly in July, with 32 per cent of companies acquiring additional raw materials and semi-finished goods. Respondents often attributed an increase in purchasing activity to higher business.

Stocks of purchases accumulated at the fastest pace in four months in July, with 12 per cent of companies reporting increased holdings of inputs. – TradeArabia News Service