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Sustained Domestic Activity Bolsters Saudi Arabia's Non-oil Private Sector Growth in August

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Sustained Domestic Activity Bolsters Saudi Arabia's Non-oil Private Sector Growth in August

Continued improvement in local demand helped Saudi Arabia's non-oil private sector growth hit a six-month high in August, Riyad Bank and S&P Global said Thursday.

The seasonally adjusted Riyad Bank Saudi Arabia PMI came in at 53.8, up from 53.1 in July. The latest reading reflected sustained growth for a fifth straight month, though the figure remained below the long-term average of 56.8.

"Domestic demand remains an important driver of growth, and continues to provide a solid foundation for businesses. Also, it reinforces the importance of domestic investment and consumption in sustaining near-term non-oil growth. At the same time, firms appear to have sufficient capacity to respond to stronger demand without creating significant operational bottlenecks," Riyad Bank Chief Economist Naif Al-Ghaith said.

Output volumes for non-oil companies saw the strongest rise since the start of 2026 amid the ongoing recovery in market activity. Meanwhile, new orders also rose for the fifth consecutive month, though growth was moderated by a sharper drop in exports compared with July.

In terms of employment, data showed staff numbers expanded for the second month running, though the rate of job creation "remained modest and less pronounced" versus the historical trend. Supply chain conditions saw further improvements in August, driven by localized sourcing and quicker vendor turnaround, though the pace of improvement slowed to a three-month low.

Business optimism for the coming 12 months reached a seven-month high, with a fifth of surveyed firms anticipating higher activity, against the 2% expecting a decline.

"Looking ahead, the improvement in business expectations provides a constructive signal for the remainder of the year. Continued fiscal support and the pipeline of development projects remain important anchors for private sector activity, while stronger confidence is translated into investment and hiring," Al-Ghaith added.

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