Saudi PMI climbs to a six-month high of 53.8 in August

Saudi Arabia’s non-oil private sector picked up speed in August: The Kingdom’s Purchasing Managers’ Index (PMI) rose to 53.8 from 53.1 in July, a six-month high and a fifth straight month of expansion, according to Riyad Bank Saudi Arabia’s latest report (pdf). Growth is still running below the survey’s long-run average of 56.8, though.

Output drove the acceleration, with the pace of expansion at a seven-month high, moving toward its long-run trend. Firms tied the growth to improving sales volumes and recovering market conditions. New orders expanded for the fifth consecutive month following March’s brief downturn, though the picture was mixed, with some firms citing sales headwinds from intense competition and excess supply.

The global market stayed a drag: Foreign orders declined again, and at a faster pace than in July, keeping export conditions challenging even as domestic demand strengthened.

Firms are hiring, but they’re not exactly stretched. Employment rose for the second month running, though job creation stayed modest and below the series trend amid signs of spare capacity as backlogs of work fell for a third straight month.

Supply chains kept improving, with delivery times shortening for a third month, and firms lifted input purchases at the fastest pace since February to meet rising output requirements.

MEANWHILE- Cost pressures stayed elevated midway through 3Q but eased somewhat. Input costs continued to reflect rising material and transportation costs, and staff costs climbed at their strongest pace since February on retention and performance-based pay. Output charges, though, rose at their slowest pace since March as competition constrained firms’ pricing.

Confidence rebounded to a seven-month high: A fifth of surveyed firms expect higher activity over the coming year, against just 2% forecasting a decline, with optimism pinned on resilient market activity, fiscal support, and regional development projects. “The August survey signals a firmer growth trajectory for the non-oil private sector,” Riyad Bank Chief Economist Naif Al-Ghaith said in the report.