Government spending on roads, power and water is now carrying Saudi construction, while private clients slow their orders for homes, offices and shops.
The alrajhi capital Saudi Construction Index, which S&P Global compiles from a monthly survey of about 200 firms, fell to 52.3 in October from 54.4 in September, according to the survey released last week.
That is the weakest growth since May, though the index has now stayed above 50, the line between growth and contraction, for six months running.
Public works on top
The infrastructure gauge climbed to 64.3, the highest since the survey started in January.
Four in 10 firms said their infrastructure work increased. Only one in 20 said it fell.
“Infrastructure was the main driver,” said Sultan Al-Towaim, head of research at alrajhi capital.
Private work stalling
The residential gauge barely moved above the line, at 50.4.
Commercial, institutional and industrial building contracted, at 48.8, as clients turned cautious and some projects slipped, partly because of regional instability. New orders grew at their slowest pace since May.
What it costs
Price pressures eased from September but stayed close to the highest levels the survey has recorded. Firms named bitumen, electrical equipment and steel.
Buying more from local suppliers kept deliveries broadly on time, and firms started hiring again.
The bigger picture
The non-oil economy grew 1.9% in the third quarter from a year earlier, up from 0.8% in the second, according to flash estimates from the General Authority for Statistics. Overall output shrank 3.8% as oil activity fell.
State-backed projects are a big part of what is keeping the non-oil side moving.
Why it matters
Contractors working on state budgets, from roads to utilities and water, are the busiest. Firms that depend on private developers face a thinner pipeline and longer waits for decisions.
That squeeze is already showing up in building materials, with cement sales down nearly 9% in October.
What to watch
Whether planned project starts show up in November. About 31% of firms expect activity to rise over the next three months, against 5% expecting a fall.
