Saudi Arabia’s Non-Oil Sector Sees Strongest Growth Since March as PMI Climbs to 57.8

Saudi Arabia’s non-oil private sector expanded at its fastest pace in six months in September, as strong demand and rising business activity boosted confidence across the economy. The Riyad Bank Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 57.8 from 56.4 in August, marking the highest reading since March.

A PMI reading above 50 indicates expansion, while a figure below that level signals contraction. The latest data placed Saudi Arabia ahead of regional peers, with the UAE recording 54.2 and Kuwait 52.2. The strong performance reflects the Kingdom’s continued progress under its Vision 2030 strategy to diversify its economy away from oil dependence.

“Business conditions across Saudi Arabia’s non-oil private sector improved in September, with the Riyad Bank PMI rising to 57.8,” said Naif Al-Ghaith, chief economist at Riyad Bank. “The improvement marked the strongest performance since March, reflecting faster output growth and increased demand.”

Al-Ghaith added that new business inflows grew sharply, supported by stronger domestic and export orders. Companies surveyed attributed the surge in new orders to successful marketing campaigns, competitive pricing, and higher demand from the Gulf Cooperation Council (GCC) region.

According to the report, 27 percent of businesses reported an increase in activity during the month, compared to just 1 percent noting a decline. Firms also cited improved market conditions and new customer acquisitions as key drivers of growth, with new international work rising for the second consecutive month.

Employment growth remained solid, reflecting firms’ efforts to manage larger workloads and expand their sales teams. Although the pace of hiring slowed slightly compared to previous months, recruitment levels remained historically strong, helping keep backlogs stable.

“Employment continued to expand, with firms adding staff to manage higher workloads and strengthen sales teams,” Al-Ghaith said. “The overall pace of recruitment remained strong and helped ease capacity pressures.”

The report also highlighted a rise in input cost inflation, driven by increasing wages and supplier price hikes. However, firms were cautious in passing these costs on to customers. Selling prices rose at the slowest rate in four months, as companies sought to maintain competitiveness.

Despite higher costs, business confidence strengthened, with firms expressing optimism about future growth. Expectations of stronger demand, new sales enquiries, and effective marketing strategies all contributed to the upbeat sentiment.

“September’s data highlight a resilient private sector navigating cost pressures while benefiting from firm demand and steady hiring,” Al-Ghaith concluded. “With inflationary pressures easing and business confidence rising, the economy is well-positioned as it enters the final quarter of 2025.”

The survey covered around 400 private sector firms across manufacturing, construction, wholesale, retail, and services industries.