21/04/2026 04:47 AST
Business activity across Saudi Arabia in February helped lift the Kingdom's Operating Revenue Index by 5.9 percent year on year, with manufacturing, mining and transportation all posting gains.
In its latest report, the General Authority for Statistics noted that the biggest annual rise came from the information and communication sector, which saw a 19 percent increase.
Arts, entertainment and recreation were up 17.5 percent, with transport and storage seeing a 17 percent annual rise.
These came alongside increases in larger economic sectors, with mining and quarrying up 6.5 percent, the wholesale and retail trade and repair of motor vehicles sector rising 9.1 percent, and manufacturing showing a 0.1 percent expansion.
Monthly business indicators are closely watched as a gauge of private sector momentum, investment activity and the country's progress in reducing reliance on hydrocarbons.
"On a monthly basis, the Index increased by 0.3 percent compared with January 2026. Issued building permits recorded an annual decrease of 18.8 percent compared with the same month last year, and a monthly decrease of 14.4 percent compared with January 2026," said the report.
Commenting on this trend, economist Talat Hafiz told Arab News that the decline in building permits, coupled with the increase in operating revenue, "suggests improved capital efficiency within the sector."
He added: "This trend indicates that a significant number of projects are already under construction or in advanced stages of the pipeline, particularly large-scale and long-duration developments such as infrastructure, mega-projects, and major commercial ventures."
Hafiz explained that a reduction in permits does not necessarily imply lower activity or value. "Rather, it may reflect a shift toward fewer but larger, higher-value projects. This shift can influence pricing dynamics and contribute to revenue growth, especially as rising construction costs are passed through to project values, rather than reflecting a proportional increase in real output."
Wholesale and retail trade and repair of motor vehicles rose by 0.6 percent month on month, while gains of 0.5 percent and 1.4 percent were seen in construction and the financial and insurance division, respectively.
The Employees Compensation Index recorded an annual gain of 9.8 percent, mainly supported by an increase in manufacturing by 9.9 percent, construction by 7.6 percent, and wholesale and retail trade and repair of motor vehicles and motorcycle activities by 10.3 percent.
On a monthly basis, the ECI showed an increase of 0.7 percent, supported by a rise in manufacturing by 1.9 percent, construction by 0.6 percent, and wholesale and retail trade and repair of motor vehicles and motorcycle activities by 1.2 percent.
Addressing the contrast between manufacturing revenue growth and the rise in employee compensation within the sector, Hafiz added that it "raises a potential concern, but it does not necessarily indicate declining productivity."
He went on to explain that there are two plausible interpretations. "First, firms may be investing in higher-skilled labor as part of a transition toward more advanced, higher-value manufacturing. This pattern is typical in sectors undergoing structural upgrading, where labor costs tend to rise faster than output in the short term."
Hafiz noted a second interpretation explaining that the increase in compensation may reflect external factors, including policy changes such as higher minimum wages, workforce localization initiatives, and retention pressures in a competitive labor market.
Additionally, mining and quarrying increased by 0.4 percent, and financial and insurance activities grew by 1.1 percent.
The Short-term Business Statistics product is one of the economic statistical products aimed at measuring the performance of various activities of the economy in the short term through monthly indicators that monitor developments and growth rates for each activity.
Arab News
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