alrajhi capital Saudi Construction Index: Infrastructure Gains Momentum, But Overall Output Growth Slows in October

Key points:

• Construction output expands for sixth successive month
• Fastest rise in infrastructure activity since survey began in January
• Total new orders increase at slowest pace since May

This release marks the sixth public release of the alrajhi capital Saudi Construction Index, a new monthly survey of 200 construction companies that have been carefully selected to accurately represent the true structure of the Saudi Arabian construction sector.

The headline index is the seasonally adjusted alrajhi capital Saudi Construction Index. This tracks changes in the total volume of construction activity compared with one month previously. It is a weighted average of three sub-sectors: residential, non-residential structures (office/commercial, institutional, industrial), and infrastructure (transportation, energy/utilities).

The report also tracks monthly changes in variables such as new orders, business activity expectations, employment, prices and suppliers’ delivery times.

Moderate increase in total construction activity

Saudi construction output increased for the sixth month in a row during October, although the latest expansion was the slowest since May. At 52.3, down from 54.4 in September, the headline seasonally adjusted alrajhi capital Saudi Construction Index remained comfortably above the 50.0 no-change value.

Output growth was driven by a sharp and accelerated upturn in infrastructure work during October. Residential building also increased, but activity in the non-residential structures segment fell for the first time since the survey began in January.

Surge in infrastructure work

Infrastructure was by far the best-performing category in October. Around 40% of the survey panel recorded an expansion of infrastructure activity, while only 5% noted a decline. The resulting seasonally adjusted Infrastructure Activity Index posted 64.3, up from 55.8 in September and the highest reading since the survey began at the start of 2026.

Survey respondents widely commented on robust workloads linked to major civil engineering projects, particularly road transportation, utilities and other critical infrastructure work.

Meanwhile, housing activity (index at 50.4) rose at the slowest pace since the current period of growth began in May. Nonresidential structures recorded a marginal drop in construction activity (48.8). This was attributed to greater caution among clients and some delays with project execution, partly in response to regional instabilities.

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Total new orders rise at weakest pace for five months

October data revealed another moderate upturn in total new orders received by Saudi construction companies. That said, the rate of expansion was the slowest since May. Infrastructure was the strongest-performing category for new work.

Construction firms mostly noted rising client demand and resilient market conditions in October. There were some reports of longer wait times for budget approvals, especially for commercial development projects, in part due to elevated cost pressures.

Strong cost pressures persist

Average cost burdens increased sharply in October, with firms often noting higher prices paid for bitumen, electrical items and steel. The overall rate of inflation eased since September, but was the second-highest since the survey began.

Some survey respondents reported upward pressure on prices paid for imported items. However, latest data pointed to resilient supply chain performance. Construction companies suggested that greater sourcing of local materials and improved supplier inventories had helped to prevent longer lead times. 

Resilient business confidence signalled in October

Around 31% of the survey panel predict a rise in construction activity over the next three months, while only 5% forecast a decline. Positivity was recorded in all three sub-sectors. Optimism was linked to planned project starts and resilient demand, despite elevated business uncertainty.

Sultan Altowaim, Head of Research at alrajhi capital said, “The alrajhi capital Saudi Construction Index recorded 52.3 in October, marking a sixth consecutive month of expansion, although the pace of growth moderated. Infrastructure was the main driver, with its activity index reaching 64.3, the highest reading since the survey began in January, supported by road and utility projects. Residential activity also remained in expansion territory, while non-residential construction edged lower, highlighting differences in performance across the sector.

“New orders continued to increase and employment returned to growth, while greater use of local suppliers helped maintain broadly stable delivery times. Input cost inflation eased from September but remained elevated. Looking ahead, confidence remained positive across all three segments, with around 31% of firms expecting activity to rise over the next three months, compared with only 5% anticipating a decline. Planned project starts and resilient demand continue to support the sector’s growth outlook.”

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