Output growth among businesses in Saudi Arabia’s non-oil private sector ticked marginally higher during May, but was softer than in the first quarter, a new survey showed.

The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI), rose to 55.8, a shade higher than 55.6 in April. However, it remained much lower than the recent peak of 60.5 at the start of the year.

While the PMI is a weighted average of the following five indices: new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%), only the new  orders index rose in May.

“Firms reported improvements in demand, new project starts, and greater labour capacity as key drivers. This expansion, though slightly softer, reflects stable operating conditions and continued confidence across the private sector midway through the second quarter,” said Naif Al-Ghaith, Chief Economist at Riyad Bank.

The survey showed a marked increase in employment, with the rise in staffing one of the fastest seen in over a decade.

“On the domestic front, firms increased hiring to match rising output needs, while purchasing activity saw its fastest growth since March 2024, supported by improved vendor delivery times and a more agile supply chain,” said Al-Ghaith.

Panellists reported an increase in supplier charges for raw materials, with purchase price inflation ticking up to its highest since February. However, selling prices were reduced in May, due to competitive pressures.

Optimism regarding the coming 12 months was higher than in April and was the greatest recorded in one-and-a-half years, as companies cited expansion plans and improved demand conditions.

(Writing by Brinda Darasha; editing by Seban Scaria)  

brinda.darasha@lseg.com