Saudi Arabia’s private sector is experiencing its fastest pace of job creation since May 2011, according to the latest Purchasing Managers’ Index (PMI) from Riyad Bank. The robust hiring is fueled by rising demand and economic optimism, but it also comes with rising wage and input costs, placing pressure on overall pricing.
Job Market Heats Up, But So Do Costs
According to the June PMI report:
- New jobs across non-oil sectors increased at the sharpest rate in 14 years
- This hiring boom led to a record rise in wage costs, contributing significantly to overall cost pressures
“This surge in demand for staff contributed to a record increase in wage costs… and led to a renewed rise in output prices,” the report noted. Adding to wage inflation, input purchase costs also rose at the fastest rate since February 2025, driven by geopolitical risks and stronger demand.
Travel and Aviation Driving the Job Boom
A major contributor to this hiring wave is Saudi Arabia’s travel and tourism sector, particularly with the highly anticipated launch of Riyadh Air.
- Aviation-facing businesses are actively expanding their teams
- Hiring consultants note increased recruitment across airlines, airports, and hospitality services
This activity reflects the Kingdom’s broader vision to diversify away from oil and develop a thriving tourism and service economy.
June PMI Surges to 57.2: A Sign of Expanding Growth
Saudi Arabia’s non-oil PMI rose to 57.2 in June, up from 55.8 in May. A reading above 50 indicates business expansion. Key drivers of the PMI rise include:
- Higher output levels
- Rising demand and new project launches
- An active labour market
“Firms largely linked the pickup in activity to improving sales, new project starts, and better demand conditions,” the report stated. Though output growth was slightly softer than earlier highs, the momentum in hiring and project activity remains strong.
Business Confidence Hits Two-Year High
Despite rising costs, sentiment in the Saudi private sector remains upbeat.“Confidence about future activity climbed to a two-year peak,” said Naif Al-Ghaith, Chief Economist at Riyad Bank in a public statement. “Staff costs rose at a record pace as firms worked to retain talent… while purchase prices saw their fastest increase since February.” The positive outlook is underpinned by:
- Healthy order pipelines
- Stronger domestic demand
- Continued project announcements and expansion plans
