Saudi non-oil sector expansion in August
The Saudi non-oil sector continued its upward momentum in August, with activity expanding at a faster pace as the Riyad Bank Purchasing Managers’ Index (PMI) climbed to 56.4. This increase, up from 56.3 in July, highlighted the strength of both domestic demand and a revival in export orders, showing that the Kingdom remains firmly on track with its Vision 2030 diversification goals.
PMI reflects resilient growth
The Saudi non-oil sector outpaced its regional peers, with the UAE posting a PMI of 53.3 and Kuwait recording 53.0. Staying well above the 50-mark threshold that separates growth from contraction, Saudi Arabia’s PMI underscores steady momentum in the private economy. According to Naif Al-Ghaith, chief economist at Riyad Bank, August’s reading signaled another month of growth, supported by stronger demand, modest output recovery, and consistent job creation.
Survey responses pointed to rising sales, healthier marketing campaigns, and a renewed focus on international collaborations, particularly within Gulf Cooperation Council markets. These elements collectively reinforced the country’s non-oil private sector performance.
Stronger demand and export growth
The report indicated that new business inflows rose, thanks to robust domestic demand and a rise in export sales. Companies credited this rebound to more active marketing initiatives abroad and enhanced client pipelines, especially in services.
Employment trends were also supportive. Firms increased hiring in August to manage new projects and meet evolving skills requirements. While the pace of job creation slowed compared to earlier highs, it still remained historically strong.
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Rising costs and business optimism
At the same time, companies faced higher costs. Input prices climbed due to material, transport, and technology-related expenses, while wage pressures slightly eased. To offset these costs and meet strong demand, firms increased selling prices for the third straight month. However, most price hikes were described as modest.
Purchasing activity also accelerated, indicating businesses are positioning themselves for sustained growth. This reflected confidence in the stability of demand and an improved outlook. Business optimism, which had dipped in July, rebounded in August. Non-oil firms expect further positive outcomes in the coming months, citing government support, ongoing projects, and resilient consumer demand as key drivers. The steady progress confirms that the Saudi non-oil sector is building strength, ensuring long-term growth beyond hydrocarbons under the Vision 2030 framework.
