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Saudi private sector growth slows in May

Business activity in Saudi Arabia’s non-oil private sector grew at its slowest pace in five months in May, but job creation was fastest since November 2009 and input inflation climbed to a series high, a survey showed on Sunday. The SABB HSBC Saudi Arabia Purchasing Managers’ Index (PMI), which measures activity in the Opec member’s manufacturing and services sectors, fell to 62.6 in May from 62.7 in April.

The seasonally adjusted index for the world’s top crude exporter is holding well above the 50 mark that separates growth from contraction.

The survey of more than 400 private companies, which started in August 2009, also showed new export orders rising to 58.3 in May, their highest level in a year.

Overall input cost inflation picked up to an unprecedented rate, the survey showed, as employers increased salaries and wages to reward employees for good company performance and compensate them for rising living costs.

The employment index rose to a one-and-half year high of 57.4 in May with companies citing good current business conditions and expectations of higher demand in the near future.

The kingdom is undergoing multi-billion dollar projects to upgrade its infrastructure and has rolled out three consecutive record budgets, including for 2011. Worried by unrest in the region, Saudi Arabia also plans to spend an estimated $130 billion, or nearly 30 percent of its economic output, to ease social tensions, building new homes and hospitals.

Inflation in the biggest Arab economy inched up to 4.8 percent in April and analysts expect price pressures to continue growing in the coming months.


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