By ARAB NEWS
Published: Jul 4, 2011 23:23 Updated: Jul 4, 2011 23:23
JEDDAH: The new "Nitaqat" scheme, recently announced by the Labor Ministry, is helping create more job opportunities for citizens in the private sector, a survey revealed on Monday.
It also said that job creation was faster at large and medium firms than at small companies as business activity in the Kingdom’s nonoil private sector edged up to a three-month high in June after four consecutive monthly declines.
The SABB HSBC Saudi Arabia Purchasing Managers’ Index (PMI), which measures activity in Saudi Arabia’s manufacturing and services sectors, rose to 62.8 in June from 62.6 in May.
The monthly report issued by the Saudi British Bank (SABB) and HSBC reflects the economic performance of Saudi Arabian nonoil producing private sector companies and establishments through the monitoring of a number of variables, including output, new orders, exports, input prices, output prices, quantity of purchases, stocks and employment.
The headline seasonally-adjusted SABB HSBC Saudi Arabia PMI rose marginally in June, after falling over the previous four months.
The latest reading of 62.8 (up from 62.6 in May) was the highest since March and signaled a further strong improvement in operating conditions across the Kingdom nonoil private sector economy.
Latest data signaled a pick-up in overall new business growth in June.
The rate of increase was the most marked for five months, partly reflecting a series record increase in new export orders.
Strong market conditions (both at home and abroad), company expansions and competitive pricing were all reasons for improved new business performance, according to respondents.
Further gains in new work led firms to raise activity during June, the report said.
Saudi Arabia’s nonoil private sector output increased at the sharpest rate for three months as a result.
Company-size data suggested that medium firms expanded activity at a faster rate than large or small firms at the end of Q2.
Backlogs of work were almost unchanged in June, following moderate growth in May. This was despite a stronger inflow of new orders, according to the monthly report.
Anecdotal evidence suggested that the slowdown reflected efforts by some firms to keep on top of workloads.
To accommodate greater business requirements, Saudi Arabia nonoil private sector firms continued to recruit new employees in June, albeit at a weaker rate than in May.
Several companies made particular note of the hiring of locals — possibly reflecting the incentives offered by the new "Nitaqat" scheme recently announced by the Labor Ministry.
Job creation was faster at large and medium firms than at small companies.
Buying activity remained strong in June, with around 33 percent of monitored companies acquiring additional inputs to meet demand. Consequently, input stocks continued to build.
Efficient service, due to good business relationships and strong competition amongst suppliers, led to improved vendor performance in June. Lead times have shortened in every month of the survey history, although the latest improvement was slower than in May.
Overall input price pressures eased during the latest survey period, although remained elevated by historical standards.
This moderation in inflation reflected less marked increases in both purchasing and staff costs.
Output price inflation also eased in June but, like input price inflation, remained above its long-run trend.
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