The expansion of Saudi Arabia’s non-oil private sector activity accelerated in May, propelled by a surge in new orders and strengthened business confidence, according to a survey released on Tuesday.
The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) increased to 55.8 in May, up from 55.6 in April, remaining solidly in growth territory, although still below the peak of 60.5 recorded at the start of the year.
New order volumes rebounded significantly in May from an eight-month low in April, driven by heightened demand, robust sales performance, and innovative marketing initiatives. New export orders also experienced growth, albeit at the slowest pace in seven months.
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Construction sector leads surge
The new order subindex surged to 62.5 in May, compared to April’s reading of 58.6.
However, the rate of output growth slowed to its lowest level since September 2024. The construction sector led the increase in both activity and new business, as indicated by the survey.
“On the domestic front, firms increased hiring to match rising output needs, while purchasing activity saw its fastest growth since March 2024, supported by improved vendor delivery times and a more agile supply chain,” Reuters reported, citing Naif Al-Ghaith, Riyad Bank’s chief economist.Â
Input prices rose sharply, largely due to increased supplier charges for raw materials. Nonetheless, competitive pressures compelled firms to lower selling prices, particularly within the services sector, despite rising costs.
The level of business optimism showed a substantial improvement, with confidence among respondents reaching an 18-month high, as companies reported expansion plans and enhanced demand conditions.
