Saudi Arabia’s Purchasing Managers’ Index increased from 48.8 in March to 51.5 in April, returning above the 50.0 neutral threshold
Saudi Arabia’s non-oil private sector returned to growth territory in April, as companies increased their output in response to an improvement in new business volumes and to progress existing work. Last month, businesses highlighted a modest uplift in activity expectations for the year ahead.
However, the overall rate of business expansion continued to be dampened by deferrals in client spending decisions amid the Middle East conflict, whilst shipping disruptions continued to impact supply chains.
PMI rises to 51.5 in April
The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) increased from 48.8 in March to 51.5 in April, returning above the 50.0 neutral threshold. The latest figure signaled a modest recovery in operating conditions, after disruptions due to the Middle East war in March.
“The Riyad Bank PMI for April 2026 signals a constructive and resilient trajectory for the Kingdom’s non-oil sector, reinforcing the broader narrative of economic diversification under Vision 2030. With the headline PMI rising to 51.5, the sector has returned to expansion territory following a temporary dip in March, indicating that underlying business conditions remain fundamentally strong despite external headwinds,” said Naif Al-Ghaith PhD, Chief Economist at Riyad Bank.
New business received by Saudi Arabia’s non-oil private sector improved in April, following a decline one month earlier. Survey respondents reported an uptick in client numbers and stronger demand. However, the rate of sales growth remained relatively mild, with delays in client spending and investment decisions reportedly offsetting gains.
Anecdotal evidence indicated that caution surrounding the Middle East conflict had weighed on purchasing decisions. Domestic sales drove the upturn, whilst new export orders declined at the fastest rate in the survey’s history.
“The improvement in the PMI reflects a recovery in business activity and new orders, both of which moved back into growth territory. Firms reported higher output levels, supported by an increase in domestic demand and continued progress on existing projects. This suggests that internal economic momentum—driven by government spending, infrastructure development and private sector participation— continues to act as a key stabilizing force for the economy,” said Al-Ghaith.
“The strength in local demand has effectively offset some of the weakness in export orders, highlighting the increasing importance of Saudi Arabia’s internal economic engine. This shift is aligned with the Kingdom’s strategic objective to reduce reliance on external cycles and build a more self-sustaining growth model,” he added.
Cost burdens increase amid rise in raw material and freight prices
Companies in Saudi Arabia’s non-oil private sector experienced a rapid increase in cost burdens in April as regional instabilities impacted raw material and freight prices. Overall input costs rose at the fastest rate in the survey’s history, driving a near-record increase in selling charges.
In addition, output charges rose at the second-fastest pace on record behind August 2009 as firms looked to pass on higher costs to their customers. The marked rise in charges came despite some reports of firms discounting prices due to strong competition.
Despite current headwinds, Saudi Arabia’s non-oil private sector firms remained upbeat about the activity outlook, with the degree of confidence improving since March. Companies tended to cite longer-term expansion and domestic infrastructure development plans as reasons to be optimistic.
“Looking forward, sentiment remains constructive. The Future Output Index indicates that firms expect activity to strengthen over the next 12 months. The combination of resilient domestic demand, improving business activity and forward-looking optimism reinforces confidence in Saudi Arabia’s economic transformation. The underlying fundamentals remain robust, positioning the Kingdom for continued non-oil growth and long-term economic stability,” Al-Ghaith concluded.
Source: economymiddleeast