Saudi Arabia’s non-oil private sector expanded at its fastest pace in three months during May, as domestic demand improved and supply chains stabilised, data showed on Wednesday.
The Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 52.8 in May from 51.5 in April, as any reading above 50 signals growth.pm
Domestic Activity Drives Recovery
Business output accelerated to a three-month high, reversing the slowdown that followed the outbreak of the Iran war in March. Firms cited normalising working conditions, revived contracts, and stronger local demand as key drivers. However, new orders grew only modestly, the subindex edged up to 52.0 from 51.5, and remained well below the long-run trend.
Supply chains also showed encouraging signs. Supplier delivery times shortened for the first time in three months, as companies increasingly turned to local vendors. Meanwhile, backlogs of work extended their run to eleven consecutive months of growth.
Export Pressures Remain a Concern
Despite the domestic recovery, export sales fell sharply for a third straight month. Shipping disruptions, higher freight and fuel costs, geopolitical tensions, and stronger competition all weighed on overseas demand. The pace of decline eased only slightly from April’s record contraction.
Business confidence stayed muted overall. Some firms expressed optimism about a market recovery over the coming year, yet concerns about geopolitical tensions and inflation continued to temper sentiment.
“Overall, the latest PMI reading supports the expectation that Saudi Arabia’s non-oil economy will continue its upward trend during the remainder of 2026,” said Naif Al-Ghaith, Riyad Bank’s chief economist.
