Saudi Non-Oil Private Sector Stays Expansionary

Riyad Bank Saudi Arabia’s PMI eased to 56.3 in January 2026 from 57.4 in December, the lowest in six months and slightly below its long-term average. Still, the reading is consistent with a robust expansion, suggesting growth momentum has cooled but operating conditions remain firmly in positive territory. Business activity continued to rise at a solid pace and new orders increased at a marked rate, reflecting resilient domestic conditions. Export demand also strengthened, as new export orders expanded at the fastest pace since October 2025. Employment growth remained strong, though the pace of hiring eased to the softest in a year after peaking last October. Cost pressures intensified for a second straight month, with higher input prices, purchase costs, and staff expenses, particularly for metals, materials, fuel, and technology. Business confidence improved from December but stayed below its long-term average, pointing to cautious optimism for 2026.

Riyad Bank Saudi Arabia’s PMI fell to 57.4 in December 2025 from 58.5 in November, signaling a cooling but still solid expansion in non-oil private sector activity as 2025 concluded. While marking the slowest growth in four months, the headline index remained slightly stronger than its long-run average, as business activity continued to rise, though it softened to its weakest since August. New orders increased sharply again but growth also moderated amid concerns over rising competition and market saturation. Employment growth remained robust, with firms continuing to expand capacity, even as backlogs accumulated at the fastest since July. On prices, inflationary pressures intensified as purchase prices rose more quickly, prompting firms to lift selling prices at a stronger pace, while wage pressures eased to their lowest in nearly two years. Business confidence weakened to its lowest since July, reflecting a more cautious outlook for 2026 despite expectations of continued growth.

Riyad Bank Saudi Arabia’s PMI stood at 58.5 in November 2025, easing from October’s 11-year high of 60.2 but still pointing to a strong improvement in non-oil private sector conditions. Activity accelerated to its fastest pace since January as firms reported solid sales flows and steady project work. New business continued to rise sharply, though growth cooled slightly from October’s surge and export gains were modest. Hiring remained firm after last month’s near-record increase, with companies expanding capacity to handle rising workloads and a continued build-up of backlogs. Cost pressures softened, with operating expenses rising at the slowest in eight months as purchasing costs became less burdensome, though wages stayed historically elevated. Output charges increased for a sixth month but at a slower rate. Business optimism strengthened to a five-month high, driven by healthy demand pipelines, ongoing investment activity, and confidence in the Kingdom’s non-oil expansion momentum.