Saudi Arabia's construction sector returned to growth in May, with the Al Rajhi Capital Saudi Construction Index rising to 51.2 from 48.5 in April, as greater regional stability encouraged the resumption of existing projects and the restart of new developments.

“The reading was the highest in three months and reflected a modest recovery in activity,” alrajhi capital said in its latest report.

Residential construction was the strongest-performing segment, with an activity index of 53.8, supported by strong housing demand, recovering mortgage activity and improving client confidence. Non-residential structures also saw an increase in activity (index at 50.5) supported by commercial and industrial project pipelines.

Infrastructure activity dipped in May for the first time since the survey began (index at 45.7), which was attributed to subdued orders in recent months.

Higher transportation bills and raw material costs led to the sharpest rise in input prices since the survey began in January.

Sultan Al-Tuwaim, Head of Research at alrajhi Capital, said the outlook improved significantly compared to April, with participants in the survey pointing to resilient underlying demand and Vision 2030-related projects.

"While participants continued to report higher transportation costs and some logistics-related delays linked to regional geopolitical developments, the overall picture remains constructive,” he said.

(Writing by N Saeed; Editing by Anoop Menon) 

(anoop.menon@lseg.com)

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