Saudi Arabia’s Riyad Bank PMI for January 2026: Growth Moderates but Remains Robust
Saudi Arabia’s non-oil private sector continued to expand in January 2026, with the Riyad Bank Purchasing Managers’ Index (PMI) registering 56.3, down from December’s 57.4. This marks the lowest reading since August 2025, yet the index remains well above the 50.0 threshold, indicating ongoing growth. The latest data, sourced from the Sigmanomics database, highlights both resilience and emerging caution in the Kingdom’s economic outlook.
Table of Contents
Drivers this month
January 2026’s PMI reading of 56.3 reflects a second straight month of deceleration (December: 57.4; November: 58.5). The 12-month average stands at 57.6, underscoring that January’s print is below trend. Key contributors to the slowdown include:
- Softening new order growth, especially in export-facing sectors
- Moderation in output expansion, with firms citing increased input costs
- Marginal easing in employment gains
Policy pulse
Despite the moderation, the PMI remains well above the 50.0 mark, signaling continued expansion. The Saudi Central Bank (SAMA) has maintained a cautious monetary stance, mirroring the US Federal Reserve’s pause, with the repo rate at 6.00% since late 2025. Inflation remains contained near 2.2% YoY, providing policy space but with vigilance warranted as global conditions evolve.
Market lens
Immediate reaction: USD/SAR was stable, while TASI edged down 0.3% in the first hour after the print. Investors interpreted the softer PMI as a sign of cooling, but not contraction, with limited impact on the riyal or local equities. Forward rates and CDS spreads were little changed, reflecting confidence in macro stability.
Macro context
Saudi Arabia’s non-oil sector has been a key growth engine as Vision 2030 reforms accelerate. January’s PMI of 56.3 is the lowest since August 2025 (also 56.3), and below the recent peak of 60.2 in November 2025. The index has now declined for two consecutive months, with December at 57.4 and November at 58.5. Year-on-year, January 2026’s reading is 2.1 points below January 2025’s 58.4, reflecting a moderation from last year’s robust expansion.
Fiscal policy & government budget
The government’s 2026 budget projects a modest deficit of SAR 82 billion, with continued investment in infrastructure and diversification. Fiscal support remains strong, but authorities are signaling a gradual shift toward consolidation as oil revenues plateau and non-oil receipts rise. The PMI’s resilience suggests that fiscal tailwinds are still supporting private sector confidence, though the pace is easing.
External shocks & geopolitical risks
Regional tensions, particularly in the Red Sea, have increased shipping costs and supply chain uncertainty. While these factors have not yet derailed non-oil growth, they are contributing to higher input prices and some hesitancy among exporters. The PMI’s input cost sub-index rose modestly in January, echoing these pressures.
Drivers this month
- New orders: Slowed, especially in construction and trade
- Employment: Still rising, but at the slowest pace since mid-2025
- Input costs: Up modestly, driven by logistics and wage pressures
Policy pulse
SAMA’s steady rates and the government’s ongoing capital spending have underpinned business sentiment. However, the PMI’s decline may prompt closer scrutiny of credit conditions and liquidity in coming months.
Market lens
Immediate reaction: TASI (-0.3%) and USD/SAR (flat) showed muted moves, reflecting market comfort with the reading. Bond yields were unchanged, and the riyal’s peg remains secure. Investors are watching for any signs of a sharper slowdown or policy pivot.
Scenarios & probabilities
- Bullish (25%): PMI rebounds above 58 by March 2026 as supply chains normalize and fiscal stimulus accelerates.
- Base case (60%): PMI stabilizes between 56–58 through Q1 2026, with steady but slower growth as external risks persist.
- Bearish (15%): PMI drops below 55 if regional tensions escalate or global demand weakens further, pressuring non-oil activity.
Risks & opportunities
Upside risks include faster-than-expected recovery in global trade and renewed government spending. Downside risks stem from geopolitical flare-ups, higher-for-longer global rates, and potential oil price volatility. The PMI’s resilience suggests underlying strength, but vigilance is warranted.
Market lens
Immediate reaction: No major repricing in SAR assets, but forward-looking sentiment is cautious. Investors are likely to favor defensive sectors and monitor upcoming data for confirmation of trend direction.
Summary & implications
January 2026’s Riyad Bank PMI print of 56.3 confirms that Saudi Arabia’s non-oil economy remains on a growth path, albeit at a slower pace. The two-month decline signals that businesses are becoming more cautious amid global and regional headwinds. Policymakers retain room to maneuver, but the trajectory warrants close monitoring. The next few months will be critical in determining whether this moderation is a temporary pause or the start of a more sustained slowdown.
Key Markets Likely to React to Riyad Bank PMI
The Riyad Bank PMI is a leading gauge of Saudi Arabia’s non-oil economic health, with direct and indirect impacts on local equities, the riyal, and broader regional assets. The following tradable symbols are historically sensitive to shifts in the PMI, reflecting their exposure to Saudi growth, currency stability, and regional risk sentiment:
- TASI – The Tadawul All Share Index, Saudi Arabia’s main equity benchmark, closely tracks non-oil sector momentum.
- SABIC – A bellwether for Saudi industrial and export activity, often moving with PMI trends.
- USDSAR – The US dollar/riyal pair, reflecting currency stability and capital flows in response to macro data.
- EURUSD – Sensitive to global risk sentiment and oil-linked flows, with indirect ties to Saudi macro prints.
- BTCUSD – Bitcoin’s price can react to shifts in regional risk appetite and capital allocation trends.
| Year | Avg PMI | TASI YoY % Change |
|---|---|---|
| 2020 | 48.9 | -7.1% |
| 2021 | 54.2 | 29.8% |
| 2022 | 56.1 | 4.3% |
| 2023 | 57.0 | 13.2% |
| 2024 | 57.8 | 8.9% |
| 2025 | 57.6 | 6.4% |
Since 2020, TASI’s annual performance has shown a strong positive correlation with the average Riyad Bank PMI. Years with PMI above 56.0 have consistently delivered positive equity returns, underscoring the index’s value as a forward indicator for Saudi stocks.
FAQ
Q: What does the January 2026 Riyad Bank PMI reading indicate?
A: The January 2026 PMI of 56.3 signals continued non-oil sector growth in Saudi Arabia, though at a slower pace than previous months.
Q: How does this PMI reading compare to historical trends?
A: January’s print is below the 12-month average (57.6) and marks a two-month decline, but remains well above the 50.0 expansion threshold.
Q: Which markets are most affected by the Riyad Bank PMI?
A: Saudi equities (TASI, SABIC), the US dollar/riyal pair (USDSAR), and risk-sensitive assets like BTCUSD often react to PMI shifts.
Bottom line: January’s PMI confirms Saudi Arabia’s non-oil growth is moderating but remains resilient. Investors and policymakers should watch for further signs of deceleration or stabilization in coming months.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.- Sigmanomics database, Riyad Bank PMI, release 2026-02-03.
- Saudi Central Bank (SAMA) monetary policy statements, 2025–2026.
- Saudi Ministry of Finance, 2026 Budget Statement.
- Market data: Tadawul, Bloomberg, Sigmanomics market dashboards.
Updated 2/3/26
January 2026’s PMI of 56.3 is down from December’s 57.4 and below the 12-month average of 57.6. The index has now fallen for two consecutive months, reversing the surge seen in November 2025 (60.2). The current reading is also the lowest since August 2025, when the PMI last touched 56.3.
Compared to the prior six months, the PMI peaked in November (60.2), then eased in December (57.4) and January (56.3). The year-ago figure for January 2025 was 58.4, highlighting a 2.1-point YoY decline. This trend suggests that while growth remains solid, momentum is cooling as external and domestic headwinds mount.