Saudi business activity eases in December from record high

Jeddah: Business activity in Saudi Arabia's non-oil private sector slowed in December from the previous month's record high, with declines in output and new orders pulling the index lower, a purchasing manager's survey showed yesterday.

The SABB HSBC Saudi Arabia Purchasing Manager's Index (PMI), which measures the performance of the Opec member's manufacturing and services sector, eased to 61.3 points in December from November's 62.2 point peak. The seasonally adjusted index is still 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 slow to 69.2 points from a series record of 71.8 last month.

Although the output index slipped from November, it continued to signal a substantial monthly increase in the kingdom's non-oil private sector activity, the survey said.

"Approximately 43 per cent of the survey panel raised output since Nov-ember," it wrote.

New orders from customers dropped slightly to 68 points from last month's 68.1, but still pointed towards improving market conditions and company expansions boosting demand, the survey participants said. Job creation stayed robust in December at 54 points with one-tenth of companies hiring new staff. Unemployment stands at around 10 per cent in Saudi Arabia where the government is trying to spur private sector growth and create more jobs for its growing population of more than 18 million.

"In order to keep output growth in line with the upward trend in demand, Saudi Arabian non-oil private sector firms took on new staff, raised buying activity and built up inventories in December," HSBC said.

"Both employment and input stocks increased markedly, while purchases rose considerably."

In a Reuters poll, analysts forecast the country's economy will grow by 4.3 per cent in 2011.