RIYADH: Saudi Arabia’s construction activity expanded for a fifth consecutive month in September, supported by resilient demand and ongoing projects, although the pace of growth eased from August.
The seasonally adjusted alrajhi capital Saudi Construction Index, compiled by S&P Global, fell to 54.4 from 55.4 in August but remained above the 50 mark separating expansion from contraction. The latest reading was the weakest pace of growth in four months.
Activity increased across residential, non-residential and infrastructure segments, with residential and infrastructure recording the strongest performances, according to the survey of about 200 construction companies.
The construction reading comes as business confidence across Saudi Arabia remained positive in September. The General Authority for Statistics’ Business Confidence Index stood at 56.6, with construction recording the highest reading among the three main sectors at 57.1, compared with 56.3 for industry and 55.4 for services.
The data come as Saudi Arabia continues to advance large-scale housing, infrastructure and industrial projects under its economic diversification strategy, supporting demand across the construction sector.
Sultan Al-Towaim, head of research at alrajhi capital, said: “Activity increased across all three segments (infrastructure, residential and non-residential sectors), supported by ongoing projects and resilient demand.”
Broad-based growth
September marked another solid increase in construction output, extending the rebound that began in May. All three sub-sectors recorded growth, with residential and infrastructure the best performers.
Infrastructure activity accelerated to 55.8 in September from 53.9 in August, its second-highest reading since the survey began in January.
Residential activity stood at 56.6, while non-residential activity covering office, commercial, institutional and industrial work rose only marginally to 50.9.
Survey respondents cited resilient market conditions and strong demand associated with large-scale construction projects as drivers of growth in residential, commercial and infrastructure work.
Some companies, however, reported sales headwinds from slower client decision-making, while others pointed to rising cost pressures.
New orders rise
New orders increased for a fifth consecutive month, although the pace of growth was the slowest since May. Order growth was strongest in infrastructure and weakest in non-residential structures.
Survey respondents cited robust sales pipelines and demand from large housing, transport and industrial development projects.
Some companies said regional instability had encouraged clients to defer approvals for new commercial developments.
Cost pressures intensified in September, with about 45 percent of respondents reporting higher input costs and less than 1 percent reporting a decline.
“Cost pressures increased, with input price inflation reaching its highest level since January, alongside a slight lengthening of delivery times,” Al-Towaim said.
He added that subcontractor availability continued to improve and companies remained positive about their project pipelines.
Positive outlook
About 34 percent of construction companies expect activity to increase over the next three months, while only 8 percent anticipate a decline.
Optimism was strongest in the residential segment, where confidence reached its second-highest level since January.