Saudi Arabia’s non-oil private sector expanded at the fastest pace in three months in May as domestic demand improved and supply chains stabilized, while business optimism remained subdued amid conflict in the region, a survey showed on Wednesday.
The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index, compiled by S&P Global, rose to 52.8 in May from 51.5 in April. The 50-mark separates growth from contraction.
Output accelerated at the fastest pace in three months after March’s downturn following the start of the Iran war,as firms cited normalising working conditions, revived contracts and stronger local demand. The new orders subindex rose only modestly to 52.0 in May from April’s 51.5 reading, and remained well below the long-run trend.
Export sales fell sharply for a third straight month, hit by shipping disruption, higher freight and fuel costs, geopolitical tensions and stronger competition. The pace of decline eased only modestly from April’s survey-record contraction.
However, supply chains improved, with suppliers’ delivery times shortening for the first time in three months as firms relied more on local vendors. Backlogs of work rose for an 11th consecutive month, albeit moderately.
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“Overall, the latest PMI reading supports the expectation that Saudi Arabia’s non-oil economy will continue its upward trend during the remainder of 2026,” said Naif Al-Ghaith, Riyad Bank’s chief economist.
Business optimism remained muted, however, with some companies’ hopeful of a market recovery in the coming year but also wary about geopolitical tensions and inflation.
