Saudi Arabia’s Non-Oil Economy Posts Strong Growth in August on Robust Demand and Exports

Saudi Arabia’s non-oil private sector economy expanded at a slightly faster pace in August, supported by strong domestic demand and a rebound in export orders, according to a closely watched survey released on Wednesday.

The Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 56.4 in August from 56.3 in July, remaining comfortably above the 50-point threshold that separates expansion from contraction. The figure also placed the Kingdom ahead of regional peers, with the UAE and Kuwait recording August PMI readings of 53.3 and 53.0, respectively.

The data signals the resilience of Saudi Arabia’s non-oil economy, a key pillar of its Vision 2030 strategy aimed at reducing reliance on hydrocarbons.

Naif Al-Ghaith, chief economist at Riyad Bank, said the latest reading reflects “another month of steady growth, driven by improving demand conditions, a modest rebound in output growth, and further gains in employment.” While activity growth has cooled from earlier highs this year, he noted that “the underlying trend remains firmly positive.”

Survey respondents highlighted improving economic conditions, stronger sales, and active marketing campaigns as key drivers of business activity during the month. A notable rise in new orders, including from abroad, provided an additional lift. Companies attributed the pickup in export sales to greater marketing in external markets and partnerships with clients across the Gulf Cooperation Council region.

“Firms reported stronger new business inflows, supported by an uptick in export orders and continued growth in domestic demand,” Al-Ghaith added. “Many attributed the improvement to more active marketing efforts and a healthier client pipeline, particularly across the service sector.”

Employment in the Kingdom’s non-oil private sector also grew sharply in August, reflecting new projects and increasing demand for skilled labor. Although the pace of hiring slowed from recent peaks, it remained historically strong, according to the survey.

Purchasing activity accelerated during the month as firms increased orders to support ongoing and upcoming projects. At the same time, businesses raised selling prices for the third straight month, a response to higher input costs and rising demand.

“Input prices remained elevated due to persistent pressures on materials, transportation, and technology-related expenses,” Al-Ghaith said. “Although wage pressures eased slightly, cost challenges remained broad. With demand rising, output prices continued to grow, though the increases were modest.”

After slipping to a 12-month low in July, business optimism improved in August. Non-oil companies expressed confidence in achieving stronger outcomes in the months ahead, citing supportive government policies, rising demand, and a solid pipeline of ongoing projects.

The results underscore Saudi Arabia’s steady progress in strengthening its non-oil economy, even as global economic uncertainty weighs on growth prospects elsewhere in the region.