Saudi Non-Oil Activity Returns to Growth as PMI Hits 51.5
Riyadh Bank Purchasing Managers' Index rises to 51.5 from 48.8 a month earlier, signaling a modest recovery.
Riyadh: Saudi Arabia's non-oil private sector returned to expansion in April, with the Riyad Bank Purchasing Managers' Index (PMI) rising to 51.5 from 48.8 a month earlier, indicating a modest recovery in business conditions.
The rebound in activity and new orders followed a contraction in March, as firms reported stronger domestic demand and an increase in client numbers, according to data compiled by S&P Global.
The improvement in the Kingdom's PMI came after it fell below 50 in March due to Iran's retaliatory strikes across the Gulf, which caused the biggest business disruption in the region since the COVID-19 pandemic.
These incidents led to airport closures, halted port operations, and sharp swings in financial markets.
Naif Al-Ghaith, chief economist at Riyad Bank, noted that the 51.5 reading suggests a constructive and resilient trajectory for Saudi Arabia's non-oil sector, supporting the country's broader economic diversification efforts under Vision 2030.
He added that despite external headwinds, underlying business conditions remain fundamentally strong.
The expansion in the non-oil sector is central to Saudi Arabia's Vision 2030 strategy, which aims to reduce the Kingdom's reliance on oil revenues and develop a robust diversified economy.
In April, output expanded as firms progressed on existing projects and saw a mild pickup in client demand.
However, S&P Global pointed out that the rate of sales growth remained relatively mild due to delays in client spending and investment decisions.
The overall rate of business expansion was also dampened by deferrals in client spending amid ongoing Middle East tensions and shipping disruptions impacting supply chains.
Al-Ghaith noted that delivery times lengthened during the month, prompting firms to build inventories as a precautionary measure.
This reflects short-term logistical challenges but also indicates proactive business behavior and forward planning.
The April survey indicated a substantial increase in cost burdens among non-oil companies in Saudi Arabia.
Higher raw material prices and transportation costs led to the steepest rise in business expenses since the survey began nearly 17 years ago.
Despite these challenges, non-oil firms in Saudi Arabia expressed optimism about the future, driven by factors such as longer-term expansion and domestic infrastructure development plans.
The Future Output Index suggests that firms expect activity to strengthen over the next 12 months.
Al-Ghaith concluded that the underlying fundamentals for non-energy firms in Saudi Arabia remain robust, positioning the Kingdom for continued non-oil growth and long-term economic stability.
In February, the General Authority for Statistics reported that Saudi Arabia's real gross domestic product expanded by 4.5 percent year on year in 2025, driven by strong growth in both oil and non-oil activities.
Non-oil activities in the Kingdom grew by 4.9 percent in 2025 compared with the previous year.
Flash estimates from GASTAT in April showed that Saudi Arabia's real GDP expanded by 2.8 percent in the first quarter of 2026 compared with the same period in 2025, primarily driven by gains in non-oil activities.
The rebound in activity and new orders followed a contraction in March, as firms reported stronger domestic demand and an increase in client numbers, according to data compiled by S&P Global.
The improvement in the Kingdom's PMI came after it fell below 50 in March due to Iran's retaliatory strikes across the Gulf, which caused the biggest business disruption in the region since the COVID-19 pandemic.
These incidents led to airport closures, halted port operations, and sharp swings in financial markets.
Naif Al-Ghaith, chief economist at Riyad Bank, noted that the 51.5 reading suggests a constructive and resilient trajectory for Saudi Arabia's non-oil sector, supporting the country's broader economic diversification efforts under Vision 2030.
He added that despite external headwinds, underlying business conditions remain fundamentally strong.
The expansion in the non-oil sector is central to Saudi Arabia's Vision 2030 strategy, which aims to reduce the Kingdom's reliance on oil revenues and develop a robust diversified economy.
In April, output expanded as firms progressed on existing projects and saw a mild pickup in client demand.
However, S&P Global pointed out that the rate of sales growth remained relatively mild due to delays in client spending and investment decisions.
The overall rate of business expansion was also dampened by deferrals in client spending amid ongoing Middle East tensions and shipping disruptions impacting supply chains.
Al-Ghaith noted that delivery times lengthened during the month, prompting firms to build inventories as a precautionary measure.
This reflects short-term logistical challenges but also indicates proactive business behavior and forward planning.
The April survey indicated a substantial increase in cost burdens among non-oil companies in Saudi Arabia.
Higher raw material prices and transportation costs led to the steepest rise in business expenses since the survey began nearly 17 years ago.
Despite these challenges, non-oil firms in Saudi Arabia expressed optimism about the future, driven by factors such as longer-term expansion and domestic infrastructure development plans.
The Future Output Index suggests that firms expect activity to strengthen over the next 12 months.
Al-Ghaith concluded that the underlying fundamentals for non-energy firms in Saudi Arabia remain robust, positioning the Kingdom for continued non-oil growth and long-term economic stability.
In February, the General Authority for Statistics reported that Saudi Arabia's real gross domestic product expanded by 4.5 percent year on year in 2025, driven by strong growth in both oil and non-oil activities.
Non-oil activities in the Kingdom grew by 4.9 percent in 2025 compared with the previous year.
Flash estimates from GASTAT in April showed that Saudi Arabia's real GDP expanded by 2.8 percent in the first quarter of 2026 compared with the same period in 2025, primarily driven by gains in non-oil activities.