Saudi Arabia Construction Activity Expands for Fourth Consecutive Month

Saudi Arabia’s construction sector continued to expand in August, marking a fourth consecutive month of growth as strong demand and rising new orders supported activity across major segments of the industry.

The seasonally adjusted Al Rajhi Capital Saudi Construction Index, compiled by S&P Global Market Intelligence, rose to 55.4 in August from 55.2 in July. The reading remained well above the 50-point level that separates expansion from contraction and was the second-highest result recorded since the survey began in January.

Sultan Al-Towaim, head of research at Al Rajhi Capital, said activity increased across infrastructure, residential and non-residential construction.

Infrastructure recorded its fastest increase in new orders since February, while purchasing by construction companies rose at its quickest rate since the survey started. Supplier delivery times also improved for a fourth consecutive month.

Residential construction leads growth

The residential sector was the strongest-performing segment for the third time in four months, with its activity index reaching 57.5.

Companies linked the increase to improving market conditions, new project launches and construction work associated with major urban development programmes.

Infrastructure activity also continued to grow at a solid pace, recording an index of 53.9. Although growth slowed from July, the latest figure remained stronger than any reading recorded during the first half of 2026.

Regional development, investment in utilities, new roads and transport connectivity projects helped support infrastructure activity.

The non-residential sector recorded an index of 53.5, also indicating solid growth. Companies pointed to improving economic conditions and the resumption of projects, although some reported delays in client decisions and continued caution among customers.

New orders support expansion

New business received by construction companies increased sharply again in August. Infrastructure posted the strongest improvement in new work, recording its fastest growth since February.

Residential construction also saw significant gains, with new orders increasing at their fastest rate since the survey began.

The stronger flow of new work contributed to an increase in employment during August. Companies also stepped up purchasing activity at the fastest pace recorded since January.

Supply conditions improved for a fourth straight month despite rising demand for construction materials. Some companies continued to face delays in international shipping.

Input price inflation accelerated after reaching a three-month low in July. Higher transportation expenses and increased prices for raw materials, particularly aluminium, copper and steel, contributed to the rise.

Firms remain optimistic

Construction companies remained positive about the year ahead, although confidence eased from July. Around 42 percent of firms expected overall business activity to increase, while only 7 percent anticipated a decline.

Optimism was also positive over the next three months, with residential and infrastructure firms reporting the strongest confidence. Companies cited healthy project pipelines, improving sales prospects and new project starts.

Al-Towaim said higher input costs had not undermined expectations for continued growth, with strong project pipelines providing support for the sector’s outlook.