6th August 2026

Key points:

Construction activity rises at a robust pace in July
New order growth accelerates to its fastest since February
Employment numbers increase for first time in four months

This release marks the third 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.

Business activity rises for the third month in a row

Saudi construction companies recorded another robust expansion of business activity in July, which extended the current period of growth to three months. The headline seasonally adjusted alrajhi capital Saudi Construction Index registered 55.2, down slightly from 56.3 in June but still well above the 50.0 no-change threshold. The latest reading was the second-highest since the survey began in January.

Higher levels of activity were linked to a sustained rebound in new order books and the reactivation of delayed projects across the construction sector.

Infrastructure activity expands at fastest pace in 2026 so far

All three main segments recorded an upturn in output during July, with infrastructure work the fastest-growing area of construction activity. The latest rise in infrastructure work was the steepest since the survey began in January (index at 56.9). Anecdotal evidence suggested that government-backed infrastructure developments had provided a solid foundation for growth in July, particularly for transportation projects and utilities.

Residential building also expanded at a strong pace in July (index at 56.0), which marked three months of continuous growth. Many firms noted robust demand for urban residential projects and an improvement in broader market conditions.

Non-residential structures activity lost some momentum in July, but the rate of growth was still the second-fastest since February (index at 53.4).

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Strongest increase in new orders since February

July data revealed the steepest rise in total new work received by Saudi construction companies for five months, driven by faster growth in all main segments. New orders in the residential category expanded at a particularly strong pace, with the latest upturn the greatest since January. Survey respondents widely commented on improving market conditions, a sustained recovery in investment sentiment and new tender opportunities linked to public infrastructure projects.

Meanwhile, strong pipelines of new work led to renewed job creation during July and a rise in input buying for the second month running.

Input price inflation eases to three-month low

Average cost burdens increased sharply in July, but rate of inflation fell from June’s survey-record high. This was helped by improving supply conditions, as signalled by the strongest improvement in vendor performance since February.

Construction firms remain upbeat about growth outlook

Around 48% of the survey panel predict a rise in business activity over the year ahead, while only 4% forecast a decline. This pointed to the highest level of optimism since the survey began in January. Construction firms noted easing geopolitical tensions, a revival in new contracts, and a broad range of opportunities linked to Vision 2030 initiatives. The increased adoption of public-private partnerships was also cited as boosting the growth outlook.

Sultan Altowaim, Head of Research at alrajhi capital, said, “The alrajhi capital Saudi Construction Index signalled another strong month for the Saudi construction sector in July, with business activity expanding for a third consecutive month. The improvement was supported by stronger new order growth, reflecting continued demand across the sector and the reactivation of previously delayed projects. While input costs continued to rise, cost pressures eased during the month.

“Infrastructure recorded the strongest growth among the three major construction segments, supported by government-backed transportation and utilities projects, while residential activity continued to benefit from healthy underlying demand. Encouragingly, employment returned to growth as firms responded to stronger pipelines of work.

“Looking ahead, business confidence strengthened to its highest level since the survey began, supported by easing geopolitical tensions, a recovery in new contracts and increasing public-private partnership opportunities. These factors continue to provide a positive backdrop for Saudi Arabia’s construction sector.”

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