RIYADH: Saudi Arabia’s non-oil private sector remained firmly in expansion territory in February, supported by strong domestic demand and steady project approvals, according to the latest Riyad Bank Purchasing Managers’ Index.
The report, compiled by S&P Global, stood at 56.1 in February, slightly down from 56.3 in January in what was a nine-month low.
A PMI reading above 50 signals expansion, while a figure below 50 indicates contraction.
Developing a robust non-oil ecosystem remains central to Saudi Arabia’s Vision 2030 strategy, as the Kingdom continues efforts to diversify its economy and reduce reliance on crude revenues.
Iran’s retaliatory strikes across the Gulf since Feb. 28 have caused the biggest business disruption in the region since the COVID-19 pandemic, leading to airport closures, halted port operations, and sharp swings in financial markets.
Naif Al-Ghaith, chief economist at Riyad Bank, said: “Saudi Arabia’s non-oil private sector sustained its expansionary trajectory with a PMI reading of 56.1 in February, though the pace of output growth eased to its lowest level since last August.”
He added: “This performance was driven by robust domestic demand and a steady flow of new project approvals. Despite the moderation in momentum, the sector remains firmly in growth territory, supported by seven months of rising international sales and an improving volume of new orders.”
In February, the General Authority for Statistics reported that Saudi Arabia’s real gross domestic product expanded by 4.5 percent year on year in 2025, driven by strong growth in both oil and non-oil activities.
It added that non-oil activities in the Kingdom grew by 4.9 percent in 2025 compared with the previous year.
Although output growth slowed to a six-month low, it remained substantial. Survey respondents frequently cited improved customer demand and new project approvals as key drivers. However, some noted that competitive pressures across markets weighed on growth.
Order books expanded during the month, largely reflecting stronger domestic sales.
Panelists also attributed higher new work volumes to supportive government policies, improved customer spending, increased sales and marketing efforts, digital business development, and collaborative projects with clients.
“A key highlight of the February results was the sizeable increase in employment, as firms expanded their workforce to manage higher workloads and new business inflows,” said Al-Ghaith.
He added that the acceleration in hiring signals confidence in near-term demand, even as overall output growth moderated.
Supply chain performance also improved, with delivery times shortening amid better coordination and operational efficiencies.
“Overall, February’s results point to an economy that remains strong but is moving onto a more sustainable balance. Growth has moderated, yet demand and hiring activity continue to anchor the expansion,” said Al-Ghaith.
He added: “The broader trend remains positive, with businesses actively adjusting their capacity while maintaining a high degree of confidence in underlying market conditions.”
Looking ahead, survey participants expressed optimism for the next 12 months, citing new client projects, stronger demand and improving domestic economic conditions as key supporting factors.
However, JPMorgan on March 2 cut its 2026 non-oil growth forecast for the Gulf by 0.3 percentage points and lowered its projection for Saudi Arabia by 0.2 percentage points, cautioning that the estimates are preliminary and subject to high uncertainty.
