Reuters — Saudi Arabia’s non-oil private sector recorded its fastest expansion in three months in June, as robust customer demand and higher hiring levels supported business growth, according to survey data published Thursday.
Saudi non-oil PMI June 2025 driven by strong demand and new orders
The seasonally adjusted Riyad Bank Purchasing Managers’ Index (PMI) rose to 57.2 in June, up from 55.8 in May, remaining well above the 50-point mark that signals expansion.
New orders grew at the fastest pace in four months. The sub-index rose to 64.3 from 62.5, reflecting strong domestic sales. Companies credited the increase to effective marketing efforts and successful customer engagement, although export sales growth remained modest.
Riyad Bank Chief Economist Naif Al-Ghaith said improved sales, new project launches, and stronger demand conditions contributed to the rebound. However, output growth was somewhat weaker than earlier peaks.
Private sector hiring and Saudi non-oil economy expansion
Non-oil private sector firms increased hiring at the fastest pace since May 2011. Companies expanded their workforce to manage rising workloads, reflecting confidence in future activity.
Meanwhile, input prices rose sharply, continuing second-quarter trends. Companies passed these higher costs on to customers, resulting in the steepest rise in output prices in 18 months.
Despite inflationary pressures, business confidence improved. The Future Output Index reached a two-year high, driven by robust domestic economic fundamentals and sustained demand.
A broader economic outlook shows growth momentum.
In June, the International Monetary Fund (IMF) raised its forecast for Saudi Arabia’s GDP growth in 2025 from 3% to 3.5%. The revision reflects stronger demand linked to government-led projects and the gradual easing of OPEC+ oil production cuts.
The PMI results suggest non-oil private sector activity remains a key contributor to Saudi Arabia’s economic diversification and growth trajectory.
The Saudi Standard’s View: Private Sector Demand Keeps Growth on Track
The rise in Saudi Arabia’s non-oil PMI to a three-month high reflects the resilience of domestic demand, even as global markets face mixed signals. While export growth remains modest, strong internal consumption and project momentum continue to anchor the Kingdom’s private sector expansion.
The sharp acceleration in hiring—the fastest pace since 2011—is particularly noteworthy. It signals both business confidence and the increasing capacity of Saudi firms to scale operations in response to growing workloads. This trend aligns with broader labor market objectives under Vision 2030, which prioritize the creation of private sector jobs.
However, rising input costs and the corresponding increase in output prices highlight inflationary pressures that companies must carefully manage. The ability to pass on costs without dampening demand will test operational strategies in the months ahead.
Nonetheless, sustained business optimism, as reflected in the Future Output Index reaching a two-year high, suggests that companies view current market conditions as favorable. As government-led projects advance and the non-oil economy matures, the PMI data reinforces Saudi Arabia’s position as one of the region’s fastest-growing private sector environments.
Related: Explore more on Saudi Arabia’s evolving corporate sector
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