RIYADH — Saudi Arabia’s non-oil private sector activity posted growth at its fastest pace in three months during May, signaling a strong recovery from the slowdown recorded in March. Companies attributed this rebound to the restoration of normal business conditions following earlier disruptions linked to the regional conflict, the resumption of previously suspended work contracts, and stronger domestic demand. The Riyad Bank Saudi Arabia’s Purchasing Managers' Index (PMI) rose to 52.8 points in May 2026, representing a 2.5 percent increase and reflecting a notable improvement in the business environment. The non-oil private sector recorded stronger performance in May, with the index indicating a sharp increase in output driven by firmer domestic demand and more stable supply chains. However, growth in new orders remained modest amid another steep decline in exports. Business optimism also remained subdued, while rising input costs continued to exert significant upward pressure on output prices. According to the report, the index remained well below its long-term historical average of 56.8 points, with some companies reporting that ongoing geopolitical tensions in the region had continued to restrain the pace of growth. Despite the strong increase in output, demand conditions appeared relatively muted in May. New orders expanded overall, but the rate of growth was modest and remained significantly below the long-term trend. Improved economic conditions and the resumption of projects supported activity, although these gains were partially offset by subdued customer spending and persistently intense competitive pressures. External demand also remained weak, with new export orders declining sharply for the third consecutive month. This downturn was attributed to shipping disruptions, higher freight and fuel costs, and ongoing geopolitical tensions.