Saudi Arabia's non-oil private sector sees fastest growth in three months

In May 2026, Saudi Arabia's non-oil private sector activity experienced its fastest growth in three months, as indicated by the Riyad Bank Purchasing Managers' Index (PMI), which rose to 52.8 points. This increase of 2.5% reflects a rebound attributed to stronger domestic demand and the resumption of previously suspended work contracts. Despite this positive trend, new export orders have declined for the third consecutive month, primarily due to ongoing geopolitical tensions.

The PMI figure of 52.8 suggests expansion within the non-oil sector, although it remains below the long-term average of 56.8. The growth in output was notable, yet business optimism remains subdued amid rising input costs. New orders expanded at a modest rate, significantly below long-term trends, indicating that while recovery is underway, challenges persist.

The non-oil private sector's recovery comes after a slowdown experienced in March 2026, highlighting the volatility of the economic landscape. Key stakeholders, including businesses and policymakers, are closely monitoring these developments as they navigate the complexities of domestic and international markets. The stabilization of supply chains following regional disruptions has played a crucial role in this rebound.

However, the decline in new export orders raises concerns about the sustainability of this growth. Geopolitical tensions continue to pose risks, potentially impacting trade relationships and economic stability. Understanding these dynamics is essential for businesses and investors looking to capitalize on the recovery.

Looking ahead, the non-oil sector may continue to grow if domestic demand remains strong and geopolitical tensions ease. Stakeholders should monitor the impact of these tensions on export orders and consumer spending patterns. The current environment presents both opportunities and challenges, necessitating a cautious approach to investment and operational strategies.

As the situation evolves, businesses must remain agile and responsive to changes in market conditions. The interplay between domestic demand and external factors will be critical in shaping the future trajectory of the non-oil private sector.