PMI Holds Strong at 58.1, Confirming Continued Expansion

The Saudi non-oil sector maintained resilience in March, with the Purchasing Managers’ Index (PMI) registering 58.1, slightly below February’s 58.4 but still well above the growth threshold of 50.0. This marks the fifth consecutive month of strong business activity, signaling steady market confidence despite a slight slowdown from previous highs.

Job Growth Surges: Fastest Hiring Pace in Over 12 Years

Despite the moderated PMI reading, Saudi non-oil sector businesses recorded the fastest employment growth in over a decade, as firms expanded workforce capacity to meet growing demand. Companies in sales, logistics, and financial services led the hiring surge, reinforcing the Kingdom’s labor market strength and sustained private sector expansion.

Demand Trends: New Orders Ease but Remain High at 63.2

New orders reflected sustained business activity, with March’s reading at 63.2, a slight dip from February’s 65.4—which had marked a near 14-year high. While foreign demand slowed, domestic sales remained robust across manufacturing, services, and construction, prompting businesses to stockpile inventories in anticipation of continued economic growth.

Regional Leadership: Saudi PMI Outpaces GCC Peers

Saudi Arabia continues to outperform regional counterparts, maintaining the highest PMI among Gulf economies. In contrast:

• UAE PMI stood at 54.0
• Kuwait PMI was 52.3
• Qatar PMI reached 52.0 The Kingdom’s ability to sustain high business activity levels despite market fluctuations reinforces investor appeal and competitiveness across MENAPT markets.

Investment & Market Expansion: $100 Billion FDI Push

Government-led initiatives to attract $100 billion annually in foreign direct investment (FDI) are driving Saudi Arabia’s private sector expansion. Regulatory reforms and infrastructure investments under Vision 2030 have strengthened investor confidence, leading to increased capital inflows across key industries such as PropTech, fintech, and logistics.

Pricing Trends: Input Costs Hit Four-Year Low

Saudi businesses benefited from the lowest input cost inflation in four years, allowing firms to reduce selling prices for the first time in six months. Competitive pricing strategies are expected to enhance market positioning, while Saudi non-oil exports surged 10.7%, reaching SR26.48 billion ($7.06 billion) in January—indicating rising global demand for the Kingdom’s diversified goods.

Operational Challenges: Backlogs Increase Amid High Demand

Despite strong performance, businesses faced rising backlogs of work, with March seeing the fastest increase since August 2018. Firms are grappling with capacity constraints as order volumes rise, prompting increased investment in automation and workforce scaling to sustain growth momentum.

Future Outlook: Economic Diversification Supports Stability

The Saudi non-oil sector continues to demonstrate resilience, bolstered by Vision 2030’s economic diversification drive and robust workforce expansion. While export-driven sectors see some softening expectations, domestic consumer confidence and investment inflows provide a stable foundation for sustained market growth.

Also Read: Emerging Industries in Saudi Arabia: A Comprehensive Market Analysis