The expansion in Saudi Arabia’s non-oil private sector activity quickened in May, driven by accelerated growth in new orders, while business confidence also strengthened, a survey showed on Tuesday.

The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI) rose to 55.8 in May from 55.6 in April, firmly in growth territory even though it remains below the peak of 60.5 seen at the beginning of the year.

New order volumes rebounded strongly in May from an eight-month low in April, attributable to increased demand, strong sales performance, and new marketing initiatives. New export orders also grew, albeit at the slowest pace in seven months.

The new order subindex jumped to 62.5 in May from April’s 58.6 reading.

But the pace of output growth eased to its softest since September 2024.

The construction sector led the rise in both activity and new business, according to the survey.

“On the domestic front, firms increased hiring to match rising output needs, while purchasing activity saw its fastest growth since March 2024, supported by improved vendor delivery times and a more agile supply chain,” Naif Al-Ghaith, Riyad Bank’s chief economist said.

Input prices rose sharply, driven by increased supplier charges for raw materials. However, competitive pressures led firms to reduce selling prices, particularly in the services sector, despite higher costs.

The degree of business optimism improved significantly, with confidence among respondents reaching an 18-month high, as companies cited expansion plans and improved demand conditions.