The pace of improvement in Saudi Arabian non-oil private sector operating conditions eased further at the end of the third quarter, as growth rates of both output and new orders cooled to series-record lows, the Saudi British Bank said Monday in its SABB HSBC Saudi Arabia Purchasing Managers' Index (PMI) for September. There was evidence of spare capacity at Saudi Arabian non-oil private sector firms in September, as both backlogs and staffing levels fell slightly. Outstanding work declined for the first time since December 2009, while employment contracted for the first time in the series history. September's price indicators pointed to further moderations in rates of inflation of both input costs and charges. Overall input costs increased at the slowest rate for eight months, which reflected milder rises in both purchase and staff costs. Output prices, meanwhile, increased at the weakest pace in the survey history. The PMI slipped further, reaching a new low of 54.5 (from 57.9 in August). Meanwhile, September data showed a further slowdown in input price inflation. Growth of incoming new business continued to slow during the latest survey period, reaching a new survey low. However, some companies indicated that government spending had improved business conditions. Overall, new work increased to the greatest extent at medium-sized companies. Meanwhile, new export orders rose at the mildest rate for ten months. Expansions in output, buying activity and input stocks all slowed further during September, in line with the easing trend in new order growth. In each case, the rate of increase was a series-record low. Lead times shortened for the second month running in September, and to a greater extent than in August. Reports indicated that better supplier performance resulted from sufficient capacity at their units and efficient service. However, the rate of improvement remained modest by historical standards. Outstanding work declined for the first time since December 2009.
