The latest Riyadh Bank Purchasing Managers’ Index reported that Saudi Arabia’s non-oil private sector stood in expansion territory in February, with robust domestic demand and consistent project approvals.
The report, compiled by S&P Global, remained at 56.1 in February, marginally down from 56.3 in January, and was a nine-month low. A PMI reading above 50 signals growth, while a figure below 50 indicates contraction.
Strengthening the non-oil economy is one of the core points of the Saudi Arabian approach to the Vision 2030 since the Kingdom is still trying to diversify its economy and to limit the impact of crude revenues.
The retaliatory attacks across the Gulf by Iran that have been taking place since Feb. 28 have had the most significant business effect in the region since the COVID-19 pandemic, with airport closures, halted port operations, and financial markets’ extreme volatility.
Naif Al-Ghaith, Chief Economist at Riyadh Bank, said, “Saudi Arabia’s non-oil private sector sustained its expansionary trajectory with a PMI reading of 56.1 in February, though the pace of output growth eased to its lowest level since last August.”
He added: “This performance was driven by robust domestic demand and a steady flow of new project approvals. Despite the moderation in momentum, the sector remains firmly in growth territory, supported by seven months of rising international sales and an improving volume of new orders.”
According to the General Authority of Statistics, released in February, Saudi Arabia’s real gross domestic product grew by 4.5 percent in 2025, and this was made possible due to robust expansion in both oil and non-oil sectors.
It further stated that non-oil operations in the Kingdom increased by 4.9 percent in 2025 compared to the previous year. Even though the growth in output dipped to a six-month low, it was still high.
Survey respondents frequently reported that improved customer demand and new project approvals were key drivers. However, some noted that competitive pressures throughout markets weighed on growth.
Order books increased throughout the month, with much of it due to stronger domestic sales. The panelists also added more new volumes of work through favourable government policies, enhanced customer consumption, sales and marketing activities, digital business creation, and joint ventures with clients.
Al-Ghaith added, “A key highlight of the February results was the sizeable increase in employment, as firms expanded their workforce to manage higher workloads and new business inflows.”
He included that the pace of increasing employment indicates optimism about the demand in the short term, despite the general growth in output being mixed.
There was also an improvement in supply chain performance from the reduction in delivery times as a result of improved coordination and efficiencies in operations.
He said, “Overall, February’s results point to an economy that remains strong but is moving onto a more sustainable balance. Growth has moderated, yet demand and hiring activity continue to anchor the expansion.”
He reported, “The broader trend remains positive, with businesses actively adjusting their capacity while maintaining a high degree of confidence in underlying market conditions.”
In the future, the survey respondents were optimistic about the coming 12 months, as they mentioned new client projects, increasing demand, and bettering domestic economic conditions as the supporting factors.
JPMorgan on March 2 reduced its 2026 non-oil growth in its Gulf estimate by 0.3 percentage points and its Saudi Arabia estimate by 0.2 percentage points, warning that the projections are initial and subject to extreme uncertainty.
