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PMI: Non-oil Private Sector Growth in Saudi Arabia, UAE Picks Up Against Tense Geopolitical Backdrop

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PMI: Non-oil Private Sector Growth in Saudi Arabia, UAE Picks Up Against Tense Geopolitical Backdrop

Expansion in the non-oil private sectors of Saudi Arabia and the United Arab Emirates improved in May but remained well below their respective long-run averages as regional geopolitical tensions continued to dampen new business growth, surveys conducted by S&P Global showed Wednesday.

The seasonally adjusted Riyad Bank Saudi Arabia PMI climbed to 52.8 in May from 51.5 in April, against the historical average of 56.8. The "notable" improvement in business activity was the quickest in three months as domestic demand and stabilizing supply chains led to a sharp rise in production.

Employment also swung back to growth, while purchasing activity trended higher for the first time since February. Still, shipping disruptions, higher freight and fuel costs, and regional tensions weighed down external demand, leading to a steep drop in new export orders for a third straight month.

"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," Riyad Bank Chief Economist Naif Al-Ghaith said. "Improving domestic demand, stabilizing supply chains, contained inflation, strong government-led investment activity, and healthy trade performance collectively provide a strong foundation for continued private sector expansion."

In the Emirates, the improvement in non-oil private sector conditions was only moderate in May. The seasonally adjusted S&P Global UAE PMI edged up to 52.6 from 52.1 in April, staying under its long-run average of 54.3.

Survey respondents reported heightened supply-chain disruptions, because of which new business growth remained subdued, holding close to April's 62-month low. A decline in exports also impacted order books.

Still, output growth reached a three-month high, with 21% of businesses seeing increased activity, thanks to stronger market demand, project expansion and government-backed initiatives.

"Positively, the longer-term outlook remained strong in May, suggesting that [Emirati] businesses still view these current challenges as temporary and expect growth to bounce back quickly," S&P Global Principal Economist David Owen concluded.

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