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Saudi Sept business growth eases but still solid -PMI
Saudi September PMI at 58.5 points, a 7-month low.
October 5, 2010 10:38 by Reuters
Saudi Arabia’s private sector saw solid growth in September but the pace of growth was the slowest in seven months as rising domestic orders failed to offset a slowdown in export orders, a purchasing mangers’ survey showed on Tuesday.
The HSBC Saudi Purchasing Managers’ Index (PMI), which measures the performance of private sector companies in the largest Gulf Arab economy, fell to 58.5 points in September from 59.1 in August but was still well above the 50 point level that marks the barrier between expansion and contraction.
The composite index, which is seasonally adjusted, stood at 59.1 points in August and peaked in June at 61.4 points.
The September PMI declined for a third straight month from a peak of 61.36 in June although “it still signalled a sharp rate of expansion,” Markit Economics said.
“September data suggested that the domestic market remained the primary driver of growth in the Saudi Arabian private sector economy, as total new work rose rapidly compared with a relatively muted increase in new export orders,” it said.
The new orders subindex grew at its slowest pace since February.
While survey participants spoke of strong market demand and favourable business conditions, the “expansions in both total new orders and new work from abroad slowed since August to seven-month lows,” Markit said.
The PMI output subindex rose sharply but by less than over the previous six months.
“The increase in activity was not sufficient to clear backlogs, which continued to accumulate at a moderate pace. Shipment delays due to difficulties at the country’s ports were also mentioned by some respondents,” Markit said.
Muhammad al-Jasser, governor of the Saudi central bank, said last week he expected the oil-based economy to grow by at least 3.5 percent in 2010, accelerating sharply from a 0.6 percent expansion in 2009.
Saudi authorities are trying to spur private sector growth to create more jobs for a rapidly-growing native population in a country where unemployment persistently hovers around 10 percent and nearly a third of the population is foreign.
Markit said that private companies added staff in September to cope with rising new orders and company expansions.
“Job creation was moderate and slightly faster than in August. Employment has risen during every month since the survey began in August 2009,” it said.
Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.
(Reporting by Souhail Karam; Editing by Susan Fenton)