Saudi Arabia’s Non-Oil Private Sector Posts Strongest Growth in Three Months

Saudi Arabia’s non-oil private sector expanded at its fastest rate in three months in June, buoyed by rising domestic demand, accelerated hiring, and increased purchasing activity, according to a new survey by Riyad Bank and S&P Global.

The Kingdom’s seasonally adjusted Purchasing Managers’ Index (PMI) rose to 57.2 in June, up from 55.8 in May. This reading signals a robust improvement in business conditions and surpasses the long-run average of 56.9, remaining well above the neutral 50-mark that separates growth from contraction.

The latest data underscores the continued momentum behind Saudi Arabia’s economic diversification goals outlined in its Vision 2030 program, which aims to reduce the country’s dependence on oil revenues by strengthening the non-oil economy.

“June’s PMI reflects a solid improvement in overall business conditions, supported by higher output, stronger demand, and a vibrant labor market,” said Naif Al-Ghaith, Chief Economist at Riyad Bank. He added that firms credited the surge in activity to better sales, new project starts, and enhanced demand conditions.

Saudi Arabia’s non-oil PMI outpaced those of its regional peers, with the UAE and Kuwait registering 53.5 and 53.1, respectively.

The positive PMI figures follow the release of first-quarter GDP data from the General Authority for Statistics, which showed that Saudi Arabia’s economy grew by 2.7% year-on-year, driven by a strong performance in non-oil sectors. Non-oil activities accounted for 53.2% of total output, marking a 5.7% rise from earlier estimates.

Survey data showed that new orders surged at their fastest pace in four months, boosted by effective marketing and successful client acquisition strategies. Employment in the non-oil private sector also saw its steepest increase since May 2011, as companies hired aggressively to manage growing workloads. This recruitment drive led to the sharpest rise in staff costs since the survey began in 2009.

Purchasing activity reached a two-year high, with nearly 40% of companies increasing their input buys in response to rising demand. However, input prices also rose sharply due to higher demand and global geopolitical uncertainty. While some businesses passed on these costs to customers, others reduced prices to stay competitive.

Despite these pressures, business sentiment remained upbeat. Confidence about future activity climbed to its highest level in two years, with firms optimistic about sustained growth, robust sales pipelines, and resilient domestic economic conditions.

The PMI survey covered approximately 400 private sector firms across key industries, including manufacturing, construction, wholesale, retail, and services.