ABU DHABI – Saudi Arabia’s non-oil private sector continued to expand in early 2026, but at a slower pace than the previous month as increased demand supported business activity despite increased cost pressures, a survey showed on Tuesday.
The seasonally adjusted Riyadh Bank Saudi Purchasing Managers Index, although in solid expansion territory, fell to 56.3 in January from 57.4 in December, its lowest level in six months.
A PMI reading above 50.0 indicates growth in activity, while below it indicates contraction.
Although new order growth was broadly flat in January, business activity was supported by solid market demand, new projects and increased customer activity.
The New Orders sub-index rose to 61.9 from 61.8 in December as volumes increased due to favorable domestic conditions and increased export sales, particularly to GCC and Asian countries. However, competition from overseas has made it difficult to attract international customers.
“Despite the slowdown in growth momentum, research evidence shows that production and sales remain strong, supported by newly approved projects, stable customer inquiries and improved investor activity,” said Naif Al Ghaith, chief economist at Riyadh Bank.
Job growth slowed to its slowest level in a year, even as staffing levels rose steadily as companies sought employees with technical expertise.
Cost pressures also intensified for the second month in a row, with companies citing rising wages and rising prices for key raw materials such as metals and fuel.
The Saudi economy will grow by 4.5% in 2025, according to preliminary government estimates, and by nearly 5% in the fourth quarter, supported by non-oil activities.
Despite the challenges, Saudi companies remained optimistic about future production in January, supported by rising orders and resilient economic conditions.
(Reuters; Editing by Toby Chopra)
