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Saudi Arabia’s Non-Oil Private Sector Growth Slows in December 2025
Growth in Saudi Arabia’s non-oil private sector slowed in December 2025. This happened mainly because of rising costs, stronger competition in the market, and lower business confidence. Even though growth continued, it was weaker compared to previous months.
According to the Riyad Bank Saudi Arabia Purchasing Managers’ Index (PMI), the index fell to 57.4 in December, down from 58.5 in November. The data comes from the S&P Global PMI survey, released on Monday. A PMI reading above 50 still shows growth, so the sector continued to expand. However, the lower number means the pace of growth has slowed.
This is the second month in a row that growth in the non-oil private sector has eased. The PMI results show that businesses faced more inflation pressure in December. Companies reported higher costs for raw materials and purchases, which affected overall business activity.
Despite these challenges, non-oil businesses continued to increase their output in December. Growth remained positive throughout 2025, supported by strong domestic demand. Companies benefited from new project approvals, ongoing investments, and steady customer activity within the country.
However, December’s growth rate was the slowest since August, according to Naif Al-Ghaith, Chief Economist at Riyad Bank. He explained that rising costs, higher selling prices, and weaker business confidence all played a role in slowing growth.
Demand and New Orders
New orders continued to grow in December, showing that demand is still strong. Export demand also increased for the fifth month in a row. Businesses said this was due to better economic conditions, gaining new clients, starting new contracts, and successful marketing efforts.
Because of higher output and more new orders, many non-oil companies hired more workers in December to meet demand.
However, growth in export demand was slower than in November and was the weakest in the last five months. Al-Ghaith noted that while demand remains stable, it is not growing faster. Companies are now working in a more competitive market, which is limiting stronger growth.
Business Outlook
Survey results also showed that non-oil companies were able to increase output by focusing on existing projects and increasing investment spending. This helped businesses maintain activity levels despite cost pressures.
Still, confidence about the future weakened in December. Many businesses are concerned about rising competition. The Future Output Index, which measures expectations for coming months, stayed above the neutral level. This means companies still expect growth into 2026.
However, the index fell to its lowest point since July, showing that businesses are becoming more cautious and less confident about strong future growth.
In summary, Saudi Arabia’s non-oil private sector continued to grow in December 2025, but at a slower pace. Higher costs and stronger competition are creating challenges, even though demand and investment remain supportive.
Published: 6th January 2026
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