ABU DHABI - Saudi Arabia's non-oil private sector continued to expand at the start of ‍2026, but at a ‍slower pace than the previous month, as rising ​demand supported business activity despite increasing cost pressures, a survey showed on Tuesday.

The seasonally ⁠adjusted Riyad Bank Saudi Arabia Purchasing Managers' Index fell to 56.3 in January ⁠from 57.4 ‌in December, to its lowest level in six months, although firmly in expansion territory.

PMI readings above 50.0 indicate growth ⁠in activity, while those below point to contraction. 

Business activity was buoyed by strong market demand, new projects, and stronger client activity, although new order growth remained almost flat in January.

The New Orders sub-index ⁠rose to 61.9, from December's ​61.8, with volumes driven by positive domestic conditions and a rise in export sales, particularly to ‍GCC and Asian countries. However, foreign competition posed challenges to gaining international clients.

"Survey evidence ​points to ongoing strength in output and sales, underpinned by newly approved projects, steady customer enquiries, and improved investor activity, even as growth momentum moderated," said Naif Al-Ghaith, Riyad Bank's chief economist.

The rate of employment growth softened to the slowest in a year, despite a solid upturn in staffing numbers, as companies sought employees with technical expertise.

Cost pressures also intensified for the second consecutive month, with firms citing higher prices for key inputs ⁠like metals and fuel, alongside increased wages.

Saudi Arabia's ‌economy grew 4.5% in 2025 according to flash government estimates and almost 5% in the fourth quarter, bolstered by non-oil activities.

Despite the ‌challenges, Saudi ⁠firms remained optimistic in January about future output, supported by rising orders and resilient ⁠economic conditions.

(Reporting by Reuters; Editing by Toby Chopra)