Saudi business activity hits record high
Jeddah, December 6, 2010
Saudi Arabia's non-oil private sector business activity climbed to its highest level to date on a record output increase, sharp rise in new orders and robust employment, a purchasing managers' survey showed on Monday.
The SABB HSBC Saudi Arabia Purchasing Managers' Index (PMI), which measures the performance of the Opec member's manufacturing and services sectors, rose to 62.2 points from October's 59.9, its highest level since the series began in August 2009.
'They are very strong readings,' said Simon Williams, chief economist for Mena at HSBC Bank in Dubai.
'The current output numbers are exceptionally strong and what is particularly encouraging is that the reading for new orders is strengthening as well which suggests that the pick up in output is likely to continue,' he said.
The seasonally adjusted index is holding well above the 50 point mark that separates growth from contraction.
The private sector of the world's top oil exporter saw output levels reach a series record of 71.8 points in November, after 68.7 the previous month. New orders in the top Arab economy grew at its fastest rate in five months, rising to 68.1.
The survey of more than 400 private companies also showed that Saudi employment increased in November at the sharpest rate since June as firms hired extra staff to help with new orders.
Saudi unemployment stands at around 10 percent and the government is trying to spur private sector growth and create more jobs for its growing population of over 18 million locals.
Purchasing and wage costs continued to rise, although at a slower pace than in October, the survey said, signalling that inflation could continue to rise.
Consumer inflation in the desert kingdom, at 5.8 percent in October, remains a worry. It came down from an 18-month peak of 6.1 percent in August but is still the highest in the Gulf.
'I think it is likely that inflationary pressures are going to build but the data suggests we are at a fairly early stage in the price growth cycle,' Williams said. - Reuters