Saudi Arabia's non-oil private sector companies recorded further growth of new business in July, while new work from abroad rose at an unprecedented rate, the Saudi British Bank (SABB) HSBC Saudi Arabia Purchasing Managers' Index (PMI) report for July showed. The index reflects the economic performance of Saudi Arabian non-oil producing private sector companies and establishments through the monitoring of a number of variables, including output, new orders, exports, input prices, output prices, quantity of purchases, stocks and employment. The Kingdom's non-oil private sector companies recorded further growth of new business in July, which respondents linked to favorable market conditions, good demand and new product launches, the bank said in a statement Wednesday. However, the rate of expansion slowed noticeably from June's near-record high to a nine-month low. This was despite a faster increase in new export business. New work from abroad rose at an unprecedented rate in the latest survey period. In line with a weaker trend in new order growth, output rose at a much slower pace during July. Nevertheless, activity continued to expand at a robust pace. Medium-sized firms registered a stronger increase in output than small or large companies. Unfinished business continued to accumulate during July. However, the rate of increase remained only marginal and much weaker than the average for the past year. To manage current workloads and company expansions, as well as to comply with the government's new Nitaqat system, firms recruited additional workers in July. Employment rose solidly, but at a milder rate than in the previous four months. Buying activity increased at a much slower rate in July, reflecting an easing trend in new order growth. Input stocks continued to rise solidly. Respondents reported longer lead times in July for the first time in the survey history. Firms blamed greater demand for inputs, low manpower at suppliers and payment problems for delays. That said, the rate of deterioration was only slight. Input price inflation was broadly stable in July, as a sharper rise in staff costs was outweighed by a slowdown in purchase price inflation. In relation to the series trend, the overall rate of increase was nonetheless substantial. Companies took advantage of favorable demand conditions to pass through some of their increased input costs to customers in July. Charges rose solidly as a result, but at the slowest pace for five months. PMI data signaled a sharp slowdown in the rate of expansion of Saudi Arabia's non-oil private sector economy at the start of Q3. Noticeably weaker rises were recorded in both output and new orders, while job creation also moderated. Reflecting this, the headline seasonally adjusted SABB HSBC Saudi Arabia PMI registered a 10-month low of 60.0, down from 62.8 in June. Nevertheless, the PMI remained comfortably above the neutral mark of 50.0, suggesting that business conditions continued to improve at a marked pace.
