Growth in business activity in Saudi Arabia's non-oil private sector rose to a six-month high in January, backed by expansion in new orders and output, said a survey of over 400 private companies published Sunday. The SABB HSBC Saudi Arabia Purchasing Managers' Index (PMI) for January 2012, which measures activity in the manufacturing and services sectors, rose to 60.04 in January from 57.66 in December. It was well above the 50 mark distinguishing growth from contraction. Output jumped to a seven-month high of 66.61 in January from 62.62 in the previous month. New orders also increased sharply, reaching 68.90 in January from 65.44 in December. The seasonally adjusted index indicated the quickest expansion in new business for six months. Many respondents said the rise was mainly driven by domestic clients. Meanwhile, the employment index rose to 53.22, just below the average for the series, from 52.05. Strong business sentiment was also apparent as businesses increased employment and purchasing activity to help meet existing and expected future activity requirements. The pace of job creation quickened for the third consecutive month during January, but nevertheless remained below the long-run series average. Greater acquisitions of inputs boosted stocks held by non-oil producing companies. The rate of expansion in purchases held quickened to its fastest pace in six months. However, revenue improvements were offset to some extent by rising input costs. Strengthening cost pressures were amplified by higher purchasing prices during January. Non-oil producing firms registered a robust rate of purchasing price inflation, a marked difference to the near one-and-half-year-low recorded in December. The rate at which salary payments increased also quickened over the month. Despite growing demands, vendor performance continued to improve, with lead times shortening at a faster pace. The reduction in suppliers' delivery times extended the current sequence of improvements to six months.
