JEDDAH – Saudi Arabia's non-oil private sector accelerated last December from the preceding month's one-year low, the SABB HSBC's Saudi Arabia Purchasing Managers' Index latest survey showed Saturday. The Index climbed to 58.9 points on a seasonally adjusted basis in December from 57.0 in November. The latest survey data indicated an increase in the quantity of items purchased at non-oil producing private sector firms in Saudi Arabia. Higher business requirements were one of the drivers behind the expansion. The Index reflects the economic performance of the non-oil producing private sector companies through the monitoring of a number of variables, including output, orders, prices, stocks and employment. A reading above 50 points in the survey of over 400 private companies indicates expansion of business activity, and below 50, contraction. Operating conditions in the Saudi Arabian non-oil producing private sector improved again in December, as the headline PMI posted a reading of 58.9, up from 57.0 in November. Output and new orders increased solidly and employment levels rose at the sharpest rate in three months. The overall rate of input price inflation weakened slightly. December data signaled a further rise in production at non-oil producing private sector firms in Saudi Arabia, with almost 30 percent of respondents indicating higher output levels. New orders continued to increase, and at a higher rate than in the previous survey period. Panelists linked growth of new work to improved market conditions. New export orders received at Saudi Arabian non-oil producing private sector firms rose further in December and at the sharpest rate in 17 months. Improved economic conditions were given as one of the drivers behind the latest increase. Meanwhile, the level of outstanding work decreased slightly, and for the second month running. Employment levels continued to rise during December, and at its sharpest rate in three months. More than 9 percent of companies indicated the hiring of additional staff and linked this to increased business. Concurrently, average prices charged by non-oil producing private sector firms in Saudi Arabia rose, which was partly driven by increased input costs. Overall input prices increased, although the rate of input cost increase weakened slightly. The rise in purchase prices was attributed to global inflationary pressures. Only a modest rise in average prices paid for salaries was reported at the end of 2012. New business in the sector continued to increase in November, though at the slowest pace in more than one year, reflecting the overall improvement in market conditions. In line with the growth in new orders, production increased further during the month. Firms raised their workforces for the fourteenth successive month in November, and at a higher rate than in the previous month. Input price inflation faced by non-oil private sector firms weakened to the lowest level in 24 months, data showed. Output levels rose further in November with more than one out of four respondents reporting an increase in production. According to anecdotal evidence, one of the main reasons behind the rise was higher new orders. More than 40 percent of the panelists surveyed indicated an increase in the level of orders received and linked this to good market conditions. Meanwhile, the Saudi Arabian banking system is well capitalized and consists largely of commercial banks. In April 2012, the International Monitory Fund (IMF) stated that there were 23 licensed banks in operation in the country. Compared to other Gulf Cooperation Council (GCC) countries, the Saudi Arabian cards and payments industry is considered, by MasterCard's 2012 consumer confidence survey, to be extremely optimistic. It offers credit, debit, prepaid and charge cards to corporations and consumers. During the review period (2008?2012), nominal growth at a CAGR of 11.79 percent was experienced within the cards and payments industry. It is predicted to register a CAGR of 12.19 percent over the forecast period (2013?2017). – SG
