RIYADH: Saudi Arabia’s non-oil private sector saw its strongest growth for a decade in January, with the Kingdom’s Purchasing Managers’ Index rising to 60.5, driven by surging new orders and business activity, a new survey showed.
The seasonally adjusted Riyad Bank PMI, released by S&P Global, jumped from 58.4 in December to its highest level in ten years, signaling robust momentum in the non-oil economy at the start of 2025.
This comes as Saudi Arabia’s push to expand its non-oil sector delivered a 19.7 percent year-on-year rise in exports in November to SR26.92 billion ($7.18 billion), with Minister of Economy and Planning Faisal Al-Ibrahim revealing that such activities now account for 52 percent of the Kingdom’s gross domestic product, further bolstering its economic transformation.
Saudi Arabia’s PMI in January surpassed that of other countries in the region such as Egypt and Kuwait, indicating that the Kingdom’s non-oil sector growth is in line with the goals outlined in Vision 2030.
“This strong performance underscores the resilience of the non-oil private sector, fueled by surging new orders and a significant rise in business output. The Output Index, reaching its highest level in 18 months, underscores strong demand conditions, with nearly 30 percent of firms reporting higher activity levels,” said Naif Al-Ghaith, chief economist at Riyad Bank.
The expansion was fueled by a surge in new orders, growing at the fastest pace since June 2011, with nearly 45 percent of businesses reporting higher sales, driven by favorable economic conditions, rising infrastructure investments, and Vision 2030 diversification efforts.
He said the rise in export orders complemented domestic demand, particularly from Gulf Cooperation Council countries, reflecting effective marketing and competitive pricing strategies.
The hiring trend remained positive, with employment levels rising for the ninth consecutive month. As businesses sought to keep up with increasing demand, many expanded their workforce, helping to reduce backlogs of work.
“Employment trends underline this positive sentiment, as companies continued to expand their workforce to meet growing demand. Supply chain improvements, combined with higher purchasing activity, have bolstered operational efficiency and prepared businesses for sustained growth,” concluded Al-Ghaith.
Despite the rapid expansion, the report noted that supply chain conditions improved, as delivery times shortened to their best levels in 10 months. Businesses also increased their stock levels, with inventory levels reaching their second-highest point in survey history.
“These indicators highlight the progress being made toward Saudi Arabia’s Vision 2030, as the economy diversifies and strengthens its non-oil foundations,” said Al-Ghaith.
While the non-oil sector enjoyed significant growth, input costs continued to rise, driven by higher raw material prices and geopolitical uncertainties.
Survey data indicated that inflation was at its second-highest level in nearly four-and-a-half years, prompting many businesses to pass on costs to consumers by raising their output prices at the fastest pace in a year.
Despite inflationary pressures, businesses remain optimistic about the economic outlook for 2025, anticipating sustained growth driven by infrastructure investments, strong market conditions, and rising demand at home and abroad.
