Saudi Arabia’s non-oil economy demonstrated continued strength at the start of 2026, with business activity expanding at a solid pace throughout January, according to the latest Riyadh Bank Purchasing Managers’ Index report from S&P Global.
The Kingdom’s PMI registered 56.3 in January, slightly down from December’s 57.4 but still well above the 50-point threshold that separates expansion from contraction. The sustained growth reflects healthy output levels, favorable market conditions, and increased customer engagement across the non-oil private sector.
This performance highlights the effectiveness of Saudi Arabia’s Vision 2030 initiative, which seeks to diversify the economy beyond petroleum by developing sectors including tourism, manufacturing, logistics, and financial services.
“Saudi Arabia’s non-oil private sector continued to expand at the start of 2026, supported by resilient domestic demand and sustained business activity,” explained Naif Al-Ghaith, chief economist at Riyad Bank. He noted that the data reveals “ongoing strength in output and sales, underpinned by newly approved projects, steady customer enquiries, and improved investor activity.”
The positive momentum comes alongside broader economic success. Statistics released earlier this month by the General Authority for Statistics showed Saudi Arabia’s real GDP grew 4.5 percent year-on-year in 2025, with non-oil activities specifically advancing 4.9 percent compared to the previous year.
January’s business conditions improved on several fronts. Companies reported rising market demand, workforce expansion, and stronger purchasing activity. New orders kept climbing as businesses benefited from positive domestic conditions and heightened client activity, prompting increases in both employment and procurement.
Al-Ghaith emphasized that “demand conditions remained a key pillar of growth, extending a trend in place since late 2020, reflecting favorable domestic economic conditions.” Manufacturing and services firms recorded particularly strong gains during the period.
International demand also contributed to growth, with new export orders expanding at their fastest rate since October 2025, fueled by stronger business from Gulf Cooperation Council countries and Asian markets. However, Al-Ghaith cautioned that “pricing conditions continued to limit the pace of expansion in some segments.”
Survey data revealed that 23 percent of participating companies reported output increases in January, while only 2 percent experienced contractions.
Employment growth, while still robust, showed some moderation. After hitting a 16-year peak last October, job creation slowed to its weakest level in a year. Companies expanding their workforces cited the need for employees with specialized technical skills.
Despite the slight deceleration, non-oil businesses remain optimistic about future prospects, supported by growing order books, continued hiring, and stable economic fundamentals.
“The survey points to a resilient non-oil sector entering 2026 with solid demand fundamentals, improving supply conditions, and cautious optimism despite firmer cost dynamics,” Al-Ghaith concluded.
The sustained expansion underscores Saudi Arabia’s progress in building a more diversified, sustainable economic foundation less dependent on oil revenues.
Source: https://www.arabnews.com/node/2631570/business-economy
