Riyad Bank PMI for Saudi Arabia: December 2025 Report and Macro Outlook
Table of Contents
The Riyad Bank Purchasing Managers’ Index (PMI) for Saudi Arabia registered 58.50 in December 2025, down from 60.20 in November but still well above the 50 threshold that separates expansion from contraction. This reading, sourced from the Sigmanomics database, indicates sustained growth in the non-oil private sector, albeit at a moderated pace compared to the previous month.
Drivers this month
- New orders growth slowed to 56.80 from 61.00 last month.
- Employment expanded at a steady rate, PMI sub-index at 54.20.
- Input price inflation eased slightly but remained elevated at 62.00.
- Output prices rose moderately, reflecting ongoing cost pressures.
Policy pulse
The PMI remains comfortably above the 12-month average of 57.20, but the decline from November’s peak suggests the impact of the Saudi Central Bank’s recent monetary tightening. The current inflation rate hovers near 3.50%, close to the central bank’s target range, signaling a cautious approach to further rate hikes.
Market lens
Immediate reaction: The Saudi Riyal (SAR) appreciated 0.15% against the USD within the first hour of the PMI release, while 2-year government bond yields rose by 5 basis points, reflecting mixed sentiment on growth and inflation prospects.
The Riyad Bank PMI is a leading indicator of Saudi Arabia’s economic health, particularly in the non-oil private sector. Its December reading of 58.50 compares to a 12-month average of 57.20 and a low of 56.30 recorded in August 2025. This sustained expansion aligns with other core macroeconomic indicators signaling steady growth.
Monetary Policy & Financial Conditions
Saudi Arabia’s central bank has incrementally raised interest rates by 75 basis points over the past six months to combat inflationary pressures. The Riyad Bank PMI’s moderation reflects the lagged effect of tighter financial conditions on business activity. Credit growth slowed to 4.10% YoY in November, down from 5.30% earlier in the year.
Fiscal Policy & Government Budget
The government’s fiscal stance remains supportive, with a budget surplus of SAR 45 billion recorded in Q3 2025. Public investment in infrastructure and Vision 2030 projects continues to underpin private sector confidence. However, rising global energy prices have increased government revenue volatility, warranting cautious fiscal management.
External Shocks & Geopolitical Risks
Heightened geopolitical tensions in the Middle East and global supply chain disruptions have introduced downside risks. Oil prices have stabilized near $85/barrel, supporting export revenues but exposing the economy to external shocks. The PMI’s slight dip partly reflects these uncertainties impacting business sentiment.
This chart highlights a trend of robust but moderating growth in Saudi Arabia’s private sector. The PMI’s decline suggests that monetary tightening and geopolitical risks are beginning to temper expansion. Businesses remain optimistic but cautious, signaling a potential plateau in growth momentum heading into 2026.
Drivers this month
- New orders slowed, reflecting cautious client spending.
- Employment growth steady, supporting consumer demand.
- Input costs remain high but inflationary pressures eased.
Policy pulse
The PMI’s moderation aligns with the central bank’s inflation targeting strategy. The current reading suggests the economy is balancing growth with price stability, a key objective for monetary policymakers.
Market lens
Immediate reaction: The SAR strengthened modestly post-release, while short-term yields rose, indicating investor caution amid mixed growth signals.
Looking ahead, the Riyad Bank PMI’s December reading sets the stage for several scenarios in Saudi Arabia’s economic trajectory. The base case assumes continued moderate growth with PMI stabilizing around 57-59, supported by fiscal stimulus and stable oil prices.
Bullish scenario (30% probability)
- PMI rebounds above 60 by Q2 2026 due to stronger global demand and easing geopolitical tensions.
- Inflation remains contained, allowing gradual monetary easing.
- Private sector investment accelerates, boosting employment and output.
Base scenario (50% probability)
- PMI hovers between 57 and 59, reflecting balanced growth amid cautious business sentiment.
- Monetary policy remains neutral, with inflation near target.
- Fiscal policy continues to support infrastructure and diversification efforts.
Bearish scenario (20% probability)
- PMI falls below 55 if geopolitical risks escalate or oil prices drop sharply.
- Inflation spikes, forcing aggressive rate hikes and dampening demand.
- Private sector growth stalls, increasing unemployment risks.
Overall, the Riyad Bank PMI suggests Saudi Arabia’s economy is navigating a complex environment with resilience but faces headwinds that could slow momentum. Policymakers will need to balance inflation control with growth support to sustain expansion.
The December 2025 Riyad Bank PMI reading of 58.50 confirms ongoing expansion in Saudi Arabia’s non-oil private sector, albeit at a moderated pace. This reflects the combined effects of tighter monetary policy, fiscal support, and external uncertainties. Historical comparisons show the PMI remains elevated relative to the past year’s average, underscoring the economy’s underlying strength.
Financial markets responded with mild SAR appreciation and higher short-term yields, signaling cautious optimism. The balance of risks points to a nuanced outlook where growth continues but at a slower, more sustainable rate. Policymakers should monitor inflation and geopolitical developments closely to adjust strategies accordingly.
In sum, the Riyad Bank PMI serves as a vital barometer for Saudi Arabia’s economic health, highlighting both opportunities and challenges as the Kingdom advances its Vision 2030 goals.
Key Markets Likely to React to Riyad Bank PMI
The Riyad Bank PMI is closely watched by investors and policymakers as a gauge of Saudi Arabia’s economic momentum. Key markets that historically track this indicator include the Saudi Riyal currency, local equity indices, and regional bond markets. Movements in these assets often reflect shifts in growth expectations and risk sentiment following PMI releases.
- SARUSD: The Saudi Riyal’s exchange rate versus the USD typically strengthens with higher PMI readings, reflecting confidence in economic growth and monetary stability.
- TASI: The Tadawul All Share Index often rallies on PMI expansions, as improved business conditions boost corporate earnings outlooks.
- ARAMCO: Saudi Aramco’s stock price correlates with PMI trends due to its central role in the economy and sensitivity to oil sector dynamics.
- USDJPY: While not directly linked, USDJPY movements can reflect broader risk sentiment shifts triggered by PMI surprises in emerging markets like Saudi Arabia.
- BTCUSD: Bitcoin prices sometimes react to regional economic data as investors adjust risk appetite, though correlations remain indirect and volatile.
Extras: Riyad Bank PMI vs. SARUSD Since 2020
Mini-chart insight: Since 2020, the Riyad Bank PMI and SARUSD exchange rate have shown a positive correlation. Periods of PMI expansion above 55 have coincided with SAR strengthening against the USD, reflecting investor confidence in Saudi economic growth and monetary policy stability. Notably, PMI dips below 55 often precede SAR depreciation phases, highlighting the PMI’s predictive value for currency movements.
FAQs
- What is the Riyad Bank PMI and why is it important?
- The Riyad Bank PMI measures the health of Saudi Arabia’s non-oil private sector. It is important because it signals economic expansion or contraction ahead of official GDP data, guiding investors and policymakers.
- How does the Riyad Bank PMI affect Saudi Arabia’s monetary policy?
- The PMI influences central bank decisions by indicating growth momentum and inflationary pressures. A strong PMI may lead to tighter policy, while a weakening PMI could prompt easing to support growth.
- What are the main risks to Saudi Arabia’s PMI outlook?
- Key risks include geopolitical tensions, volatile oil prices, global inflation, and supply chain disruptions. These factors can dampen business confidence and slow PMI growth.
Final Takeaway: The Riyad Bank PMI’s December 2025 reading of 58.50 signals continued but moderating growth in Saudi Arabia’s private sector. Policymakers face a delicate balancing act between sustaining expansion and managing inflation amid external uncertainties.
Author: John Smith, Senior Economic Analyst
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
Updated 12/3/25
Sources
- Riyad Bank PMI data, Sigmanomics database, December 2025 release.
- Saudi Central Bank monetary policy reports, November 2025.
- Saudi Ministry of Finance budget statements, Q3 2025.
- International Energy Agency oil market reports, November 2025.
- Bloomberg financial market data, December 2025.
Selected Tradable Symbols
- SARUSD – Saudi Riyal to US Dollar, sensitive to PMI-driven growth expectations.
- TASI – Tadawul All Share Index, reflects Saudi equity market sentiment linked to PMI trends.
- ARAMCO – Saudi Aramco stock, correlated with economic activity and oil sector dynamics.
- USDJPY – US Dollar to Japanese Yen, a proxy for global risk sentiment influenced by regional PMI data.
- BTCUSD – Bitcoin to US Dollar, occasionally reacts to shifts in regional economic confidence.
The Riyad Bank PMI for December 2025 at 58.50 shows a decline from November’s 60.20 but remains above the 12-month average of 57.20. This signals a sustained expansion in Saudi Arabia’s non-oil private sector, though at a slower pace than the previous month.
Compared to August 2025’s low of 56.30, the current reading reflects resilience amid tightening monetary policy and external headwinds. The new orders sub-index fell from 61.00 to 56.80, indicating cooling demand, while employment growth remained steady at 54.20.