Saudi’s Non-Oil Business Activity Grows Strongly in May Due to More New Orders
Saudi Arabia’s non-oil sector grew steadily in May. This was because new orders increased, thanks to more customer demand and stronger business confidence, a business survey said.
PMI Goes Up
The Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) went up slightly to 55.8 in May from 55.6 in April. This number is above 50, which means the economy is growing, not shrinking, according to a survey by S&P Global on Tuesday.
However, the PMI is lower than in the first few months of the year and much less than the highest point of 60.5 at the start of the year.
The survey showed that new orders were the main reason the PMI went up in May. Other parts of the survey went down.
Businesses said new orders increased because of higher demand, good sales, industrial growth, and new marketing efforts.
Buying activity also grew a lot, even though companies were careful about buying too much stock. Costs for materials went up, but companies lowered their prices because of competition.
Even though the overall growth was strong, it slowed down for the fourth month in a row and was the slowest since last September.
The construction sector grew the most, with more activity and new business. Optimism also increased a lot from April and was the highest in over a year. Companies said this was because of plans to grow and better demand.
Companies in Saudi Arabia, rich in oil, kept hiring more staff and spending more money to grow their businesses. Employment grew quickly, one of the fastest rises in over ten years.
Buying activity also grew fast, reaching the highest level in 14 months.
Important Quote
“New orders led the growth this month, rising sharply after a drop in April. The index is now back to its usual level because of strong sales, marketing, and industrial work,” said Naif Al-Ghaith, chief economist at Riyad Bank.
“Looking ahead, non-oil companies feel more confident. Business expectations are the highest since late 2023. Hiring remains strong as companies add workers to support growth, especially in operations and sales.”
Economic Growth
Saudi Arabia’s real GDP (total economic output) grew by 2.7% in the first quarter compared to last year, official data showed last month. This growth was helped by the non-oil sector, as the country tries to reduce its dependence on oil and diversify its economy.
Non-oil exports, including goods re-exported, increased by 13.4% in the first quarter of 2025. Meanwhile, oil exports dropped by 8.4% in the same period.
Published: 4th June 2025
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