Saudi Arabia’s non-oil private sector is experiencing significant growth, driven primarily by local demand and strong hiring trends, according to recent data released by Riyad Bank and S&P Global. The purchasing managers’ index (PMI) rose to 57.2 in June, surpassing the figure from May and the long-term average, indicating favorable business conditions.

This growth is largely attributed to a surge in domestic sales, bolstered by new clients and improved marketing strategies. While overseas demand showed only modest increases, new orders reached a four-month high. However, the rate of output growth has decelerated to a 10-month low, largely due to capacity constraints arising from increased operational activities. Notably, employment levels in the non-oil sector witnessed their sharpest increase since May 2011, with staff costs rising at the fastest rate since 2009, prompting many firms to increase their prices.

Optimism within the non-oil sector has surged to a two-year high, fueled by strong domestic demand and enhanced sales pipelines. This local demand is not only driving immediate growth but also indicating promising opportunities for investors seeking to explore potential growth beyond the oil industry. As companies manage rising costs by adjusting prices, stakeholders in the region should closely monitor the evolving dynamics of the market and the prospects for further expansion in the private sector.

Saudi Arabia’s movement towards a diversified economy aligns with its Vision 2030 initiative, and the current optimism in the non-oil sector suggests a bright outlook for long-term growth that extends beyond traditional oil revenues. The success of the domestic market may lead to increased economic resilience in the region, influencing trade and policy development throughout the Middle East. These developments signal a transformative economic landscape that could redefine Saudi Arabia’s position in global markets.