Saudi Construction Activity Gains Momentum for Fourth Month in a Row
Saudi Arabia’s construction sector expanded for the fourth consecutive month in August, supported by resilient demand and a sustained recovery in new orders, according to a new survey.
The seasonally adjusted alrajhi capital Saudi Construction Index, compiled by S&P Global Market Intelligence, rose to 55.4 in August from 55.2 in July. The index remained comfortably above the 50-point threshold separating expansion from contraction, marking its second-highest reading since the survey began in January.
Last month, a report from the General Authority for Statistics showed the Kingdom’s Business Confidence Index eased slightly to 56.5 in July from 56.6 in June, while the construction industry recorded a stronger reading of 57.7, compared with 54.7 for industry overall and 55.3 for services.
Sultan Al-Towaim, head of research at alrajhi capital, said activity increased across all three major construction segments — infrastructure, residential, and non-residential — with infrastructure recording its fastest rise in new orders since February. “The operating environment remained supportive, with quantity purchased (by construction companies) rising at its fastest pace since the survey began, and suppliers’ delivery times improving for a fourth consecutive month,” he added.
The residential sector led growth for the third time in the past four months, posting an index of 57.5. Firms attributed the stronger momentum to improving market conditions, new project launches, and ongoing work on major urban development schemes.
Infrastructure activity also expanded at a solid pace, recording an index of 53.9. While growth moderated slightly from July, it remained stronger than any reading recorded during the first half of 2026, supported by regional development initiatives, utilities investment, new roads, and transport connectivity projects.
Non-residential activity rose at a solid rate as well, with an index of 53.5, driven by improving economic conditions and the restart of previously stalled projects — though some companies noted continued caution and delayed decision-making among clients.
Total new business received by Saudi construction companies increased sharply again in August. Infrastructure was the best-performing category for new work, posting its fastest expansion since February, while the residential segment followed closely behind, recording its strongest improvement in new orders since the survey began in January.
Stronger demand led to a rise in employment numbers in August, with purchasing activity increasing at its fastest pace since the survey started. Supply conditions improved for a fourth consecutive month, even as demand for construction inputs grew and some firms continued to report international shipping delays. Input price inflation also picked up in August after slowing to a three-month low in July, driven by higher transportation costs and rising prices for raw materials, particularly aluminum, copper, and steel.
On the outlook, companies expressed strong optimism for the year ahead, with 42 percent expecting an upturn in overall business activity and only 7 percent anticipating a decline — though overall optimism was slightly lower than in July. Confidence remained positive over the near-term as well, particularly within the residential and infrastructure segments, supported by improving sales pipelines and a rise in new project starts.
“Although input cost inflation accelerated during August, firms remained optimistic about the outlook, supported by healthy project pipelines and expectations of continued activity growth,” Al-Towaim concluded.
Also Read:
How Artificial Intelligence Is Transforming Nature Conservation in Saudi Arabia
Hope Turns to Joy as Two Tunnel Workers Are Rescued in Nepal
