Saudi Arabia’s non-oil economy private sector gained fresh momentum in September 2026, with business conditions improving at their fastest pace in seven months as stronger domestic demand, investment activity, and new orders supported growth.
The Riyad Bank Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 55.3 in September from 53.8 in August. The latest reading was the highest since February and marked the sixth consecutive month of improving business conditions. A PMI above 50 indicates expansion, while a reading below 50 signals contraction.
The figures offer another sign that Saudi Arabia’s efforts to expand economic activity beyond oil continue to gain traction, even as regional instability and supply-chain disruptions create new challenges for businesses.
Domestic Demand Leads the Recovery
One of the strongest signals in September came from new business.
New orders increased at their fastest rate since February, moving closer to their long-term average following a slowdown in the middle of 2026. Companies attributed the improvement to better market conditions, growing customer numbers, and stronger spending.
Importantly, much of the momentum is coming from within Saudi Arabia.
Domestic consumption, investment activity, government spending, Public Investment Fund-related projects, and continued access to credit are helping support non-oil businesses across the Kingdom.
This domestic strength is particularly significant as Saudi Arabia continues to pursue the economic diversification objectives associated with Vision 2030.
Companies Are Expanding Their Capacity
Businesses are not simply reporting more orders. They are also preparing for continued demand.
Saudi companies increased hiring during September, with businesses adding technical employees and expanding sales teams. Purchasing activity also strengthened, with input buying reaching a seven-month high.
Outstanding business increased for the first time since May, another indication that companies are dealing with growing workloads.
Together, higher employment, purchasing and backlogs suggest businesses are increasing operational capacity rather than treating the improvement in demand as a temporary development.
Investment Remains an Important Growth Engine
Saudi Arabia’s diversification strategy has generated significant investment across tourism, infrastructure, technology, entertainment, logistics and other emerging industries.
Government initiatives and projects linked to the Public Investment Fund remain important sources of economic activity, while private companies are increasingly participating in the Kingdom’s expanding non-oil ecosystem.
The September PMI figures suggest that this combination of investment and domestic consumption is helping maintain private-sector momentum despite a difficult regional environment.
Foreign Demand Remains a Weak Spot
The latest figures are not uniformly positive.
New orders from international customers declined for the seventh consecutive month in September. Although the pace of decline moderated, foreign demand continues to lag behind domestic activity.
Businesses have pointed to supply-chain disruption and regional geopolitical tensions as factors affecting export sales and shipping.
That leaves Saudi Arabia with an important challenge: while its domestic non-oil economy is demonstrating resilience, converting that strength into sustained international demand will be increasingly important as the Kingdom seeks to become a larger global trade, investment and business hub.
Businesses Are Also Facing Higher Costs
Inflationary pressure represents another concern.
Companies reported significant increases in material and transportation costs during September. Businesses responded by raising their selling prices, with the rate of output-price inflation reaching its second-highest level in more than six years.
Supply conditions also remained difficult. Supplier delivery times improved only marginally, while geopolitical uncertainty continued to affect transport networks and business sentiment.
These pressures could become increasingly important if higher operating costs persist, particularly for companies dependent on imported materials or international logistics.
The Bigger Picture for Saudi Arabia
Saudi Arabia’s latest PMI reading reinforces a broader economic shift taking place across the Kingdom.
Oil remains central to government revenue and the country’s global economic influence, but domestic consumption, private investment, infrastructure development and new industries are becoming increasingly important sources of activity.
The September numbers also highlight the contrast between domestic resilience and external uncertainty. Saudi businesses are receiving more orders, hiring workers and increasing purchasing, yet exports remain under pressure and confidence about future activity has weakened amid regional disruption.
The next phase of Saudi Arabia’s non-oil expansion may therefore depend not only on maintaining strong domestic demand but also on improving productivity, strengthening private-sector competitiveness and expanding access to international markets.
For now, the latest data suggests the Kingdom’s diversification drive continues to provide meaningful economic momentum. The bigger test will be whether that momentum can remain strong while regional uncertainty, supply-chain pressures and higher business costs persist.
