Saudi Construction Continues Expansion for Fifth Month as Input Costs Hit 2026 Peak

The Al Rajhi Capital Saudi Construction Index reached 55.4 points in August, recording its fifth consecutive month above the 50-point mark that separates growth from contraction, indicating the continued expansion of sector activity despite challenges, according to Enterprise platform.

This continuity comes at a time when the value of project awards in GCC countries fell by 37.2% year-on-year to $47.4 billion in the third quarter, after conflict affected energy exports and trade routes, putting pressure on the upcoming project pipeline.

On the other hand, companies representing around 45% of the sample reported facing an increase in input prices during September—the fastest cost inflation since the survey began—increasing pressure on contractors' profit margins and making cost management a major challenge.

This development concerns investors, contracting companies, and building material suppliers in Saudi Arabia, as the index remaining above 50 signals strong execution demand, while rising costs threaten project profitability and affect the pace of completion within mega transformation projects.

What Do These Terms Mean?

Construction Index: A monthly metric compiling the views of purchasing managers in the construction sector regarding activity, orders, and employment, rising above 50 during expansion.

The 50 Level: The threshold in Purchasing Managers' Indexes separating growth above it from contraction below it, used as a benchmark to compare monthly performance.

Input Cost: The prices construction companies pay to purchase raw materials, labor, and energy; its rise impacts project costs and profit margins.

Value of Awards: The total value of contracts awarded to new projects within a specific period, used as an indicator of upcoming workload volume.