Saudi non-oil private sector registered its strongest improvement in business activity in nine months with the firms posting growth in both output and new businesses in April compared to last month, said a report.

The Saudi Arabia purchasing managers’ index (PMI) compiled by Saudi British Bank (SABB) and HSBC was reflective of strong demand conditions in the Kingdom's non-oil private sector economy for April.

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

According to the April PMI data, new businesses rose across the Kingdom markedly during the latest survey period, and that too at an accelerated rate.

The Saudi companies demonstrated their confidence in current and future business conditions by taking on new staff, increasing purchasing activity and accumulating stocks, the report pointed out.

According to SABB report, the growth of both output and new business accelerated from March readings, taking the latter above its series trend.

The report pointed out that respondents commented on improved demand conditions and more business from government contracts.

The SABB data suggested that the domestic market remained a key driver of new order growth. Rising from March’s reading of 58.7, the headline PMI posted 60.4 in April.

Registering above the series trend, it was the highest reading for nine months, and signalled another marked improvement of operating conditions across the Saudi non-oil private sector.

To accommodate gains in new business, the Saudi non-oil private sector firms raised output during April. The rate of growth was sharp and above the trend for 2012 so far, said the SABB data.

With new order growth continuing to outstrip the expansion in output, levels of unfinished business continued to build at the non-oil private sector companies. The accumulation of backlogs was solid, and the seventh in as many months, the report pointed out.

In order to keep up with rising business requirements, companies raised both employment and purchases during April. Job creation was the most marked for nearly a year, while buying activity increased at a joint series-record pace.

As a result of higher acquisitions, input stocks at the non-oil private sector firms in the Kingdom accumulated at a steeper pace. Panellists stated that holdings were increased as expectations of new order growth were positive, said the SABB index.

Cost inflation accelerated during April to a new survey record, pushed up by higher purchasing prices for raw materials and fuel, as well as higher staff costs.

To protect profit margins, and in light of strong demand, non-oil private sector firms increased their own tariffs at a solid pace, it added.-TradeArabia News Service