Saudi Arabia's construction sector recorded its fastest expansion of 2026 in June, driven by a rebound in new orders and a broad-based pickup across residential, non-residential and infrastructure work.

The Alrajhi Capital Saudi Construction Index, compiled with S&P Global from a monthly survey of about 200 construction companies, rose to 56.3 in June from 51.2 in May. The reading marked the second consecutive month above the 50.0 no-change threshold and the strongest rate of output growth since the survey began in January.

Respondents linked the improvement to new project starts, greater regional stability and the normalisation of business operations. New work received rebounded at the fastest pace since February, with strong gains across all major segments.

Residential construction remained the best-performing area, with growth accelerating to its strongest level of the year at an index reading of 58.4. Firms attributed the pickup to improved investor sentiment and continued public sector support for new residential projects. Non-residential activity reached 55.0, its highest since February, supported by pipelines of commercial and industrial work.

Infrastructure activity returned to growth at 53.6, with higher workloads tied to utilities and transportation projects alongside ongoing Vision 2030 investment spending.

Business expectations improved sharply, with the 12-month outlook reaching its highest level since the survey began. Nearly half of the panel, at 49%, anticipated a rise in activity over the year ahead, against 8% expecting a decline.

Cost pressures remained a concern. Input buying expanded for the first time in four months and suppliers' delivery times shortened, but a sharp rate of cost inflation persisted, with firms citing rising prices for aluminium, cement, electrical items and steel.

Sultan Altowaim, head of research at Alrajhi Capital, said the June reading pointed to a clear acceleration in momentum, with the improvement supported by a rebound in new orders, the restart of delayed projects and a more stable operating environment.