Saudi non-oil private sector growth slows as costs rise

Saudi Arabia’s non-oil private sector continued to face cost pressures for the second consecutive month, as growth eased in January compared to December 2025.

The headline Riyad Bank Saudi Arabia’s purchasing managers’ index (PMI) fell to 56.3 in January from 57.4 in December, its lowest rating in six months. 

A PMI score above 50 represents growth, while a reading below 50 indicates contraction.

Cost pressures increased in January with input prices, purchase prices and staff costs all rising at faster rates, said Naif Al-Ghaith, chief economist at Riyad Bank.

However, the survey points to a resilient non-oil sector entering 2026 with solid demand fundamentals, improving supply conditions and cautious optimism despite firmer cost dynamics, he said.

New export orders expanded at the fastest pace since October 2025, supported by stronger inflows from GCC and Asian markets. Hiring growth was strong in January, but showed signs of waning after reaching a 16-year record last October.

In a flash reading released on Sunday, the General Authority for Statistics (GASTAT) said the Saudi economy grew by 4.5 percent in 2025, higher than a forecast by the International Monetary Fund of 4.3 percent.

Further reading:

• Saudi Arabia ups 2025 GDP growth estimate to 4.5%
• Saudi Arabia and Kuwait log strong non-oil growth
• Saudi non-oil private-sector growth eases in December

Growth in Kuwait’s non-oil private sector was steady last month, thanks to increases in output and new orders. 

The headline PMI fell to 53.0 in January from 54.0 in December.

“The Kuwaiti non-oil private sector started 2026 in very much a similar vein to how it ended 2025,” said Andrew Harker, economics director at S&P Global Market Intelligence.

Despite efforts by some companies to hire additional staff and boost workforce capacity, the rate of job creation remained modest, he said.