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How Kuwait + Qatar + Lebanon’s non-oil private sectors performed in August: Purchasing manager indices (PMI) tracking non-energy sectors in Kuwait, Qatar, and Lebanon told a mixed tale in August. Qatar held above the 50.0 mark threshold, while Kuwait took a surprising dip below the threshold, pulled down by competitive market pressures and sluggish growth. Lebanon’s private sector economic outlook paints a bleak picture, as growing security concerns once again drive declines in new orders and output.
REMEMBER- The all-important 50.0 mark is the threshold separating contraction from growth. Anything above 50 denotes expansion, while anything below indicates contraction.
First up, Kuwait: Kuwait’s PMI indicated a slowdown in non-oil private sector growth amid strong competitive pressures. The nation recorded improvements in output, new orders, and purchasing activity at a modest pace, according to Kuwait’s S&P Global PMI (pdf). The country’s headline number slipped to 49.7 in August, falling from 51.5 in July, and falling below the 50.0 no-change mark for the first time in over 18 months.
Firms remain upbeat despite a dip in the nation’s non-oil private sector, banking on new marketing strategies to drive growth in output, although confidence is at a seven-month low. “While hopefully just a blip rather than the start of a more prolonged slowdown, the data highlight the challenges faced by firms,” economist Andrew Harker said in the report.
New orders rose at a soft but steady pace buoyed by competitive pricing and advertising, although some firms reported a drop in orders due to competition from cheaper alternatives. The growth rate of new international business was stronger compared to the overall new orders, with sales to clients in neighboring countries significantly boosting a rise in export orders. Output prices grew marginally as firms used discounts to generate new business.
Purchasing activity crept up at a slow pace, with the stock of inputs unchanged, ending a 28-month trend of accumulation. Purchase prices increased significantly amid reports of rising costs for various items such as advertising, air conditioning, computer and printing equipment, maintenance, and transportation.
Employment dropped for the first time in four months on the back of sluggish new order growth, resulting in rising work backlogs. Nevertheless, the pace of backlog accumulation slowed and remained low. Delivery times were shortened for a second month running in August.
Over in Lebanon: Lebanon’s private sector economy slumped further in August, pushed down by declines in new orders and outputs due to escalating geopolitical tensions and rising security concerns, according to Blominvest Bank’s Lebanon PMI (pdf). August’s reading saw its headline figure dip to 47.9, down from 48.3 in July.
New orders dropped in August weighed down by lower tourism demand due to escalating tensions between Israel and Hezbollah. New export orders also contracted for the ninth month running. Business activity decreased at large amid weakened demand, which private sector businesses attribute to weak customer purchasing power, regional instability, and mounting political uncertainty.
Purchasing activity fell in August at its fastest pace since December 2022, with some companies attributing the reduced buying volumes to security concerns. Overall input prices grew in August, albeit at a softer pace in comparison to the long-run average. Cost pressures were relatively moderate, though companies did experience some inflationary impacts due to regional instability, including higher shipping costs and increased ins. premiums. The rate of inflation increased only fractionally and at its lowest pace in three months.
A silver lining: Declines in employment rates softened despite a drop in backlog work volumes and new orders coming in. The reading also observed a marginal improvement in supplier delivery times.
Meanwhile, in Qatar: Qatar’s non-oil private sector signaled steady growth due to higher employment rates, new orders, and stronger purchasing activity, according to Qatar Financial Center’s PMI (pdf). The headline figure jumped to 53.1 in August, up from 51.3 in July.
Growing employment rates bolstered the headline figure, rising at their quickest pace in over five years and the second-fastest rate on record. Overall input price inflation spiked to a four-year high.
New orders jumped to a new two-year high, rising for the eighteenth time in 19 months, and supporting expansion in overall activity in the private sector. Output increased at a steady pace, remaining in line with the “strong long-run survey trend,” QFC Authority CEO Yousuf Mohamed Al-Jaida said in the report. Order backlogs declined, but at an eased pace in comparison to previous months.
Qatar was optimistic: Qatar’s “12-month outlook rose to [its] highest since March 2023,” Al-Jaida said, with confidence strengthened by a spike in new orders and employment growth.
While sentiment was down in Kuwait + Lebanon: Kuwait saw business sentiment dip to a seven-month low due to rising competitive pressures, which has left companies worried about the toll it could take on new order volumes and profit margins. Over in Lebanon, confidence plummeted in August, as security concerns “weighed heavily on the private sector,” who expressed concerns of a “bleaker” business outlook going forward with “no end in sight,” research analyst Helmi Mrad said in the Blom report.
