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How Kuwait, Qatar, and Lebanon’s non-oil private sectors performed in September: Purchasing manager indices (PMI) tracking non-energy sectors in Kuwait, Qatar, and Lebanon told a mixed tale in September. Kuwait held slightly above the 50.0 mark threshold, while Qatar took a slight dip below the threshold despite overall business improvements. Over in Lebanon, security concerns and regional tensions continued to push down business activity to its lowest since December 2021.
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 recorded marginal improvement in business conditions in September as new orders, output, employment, and purchasing slightly grew, albeit at a steady pace, according to Kuwait’s S&P Global PMI (pdf). The country’s headline number inched up to 50.3 in September, sustaining a slight improvement from being below the 50.0 no-change mark in August.
It was all about the race: Competitive pressures remained at the forefront, with Kuwaiti firms struggling to secure new business, indicating limited expansions in new orders and output rates. Firms marginally increased their selling prices in the face of competition, despite marked rise in input costs.
Subtle expansions in output + new orders: Output charges recorded a slight increase in September, reportedly driven by competitive pressure. The rate of expansion softened to its weakest pace in 20 months, although firms that were able to offer discounts saw a boost in their activities. New orders ticked up on the back of price reduction and marketing efforts, expanding at a gradual pace slightly faster than August. New exports also continued to rise solidly, although the growth rate was at a one-year low.
The job market is steady: Firms increased hiring at a marginal pace in September compared to the slight fall in employment back in August, indicating reduced pressure on capacity. Backlogs remained unchanged, ending a 19-month accumulation, but machinery faults and staff shortages meant increased backlogs for some firms.
Inflation persisted despite a rise in input costs: Overall input prices rose amid higher costs, mainly centered on the back of purchase activity as staff costs only slightly increased during the month. Firms were faced with a surge in purchasing costs, yet input buying markedly increased. Stock purchases grew, a reversal of its pause back in August. Suppliers’ delivery times were reduced, driven by competition among vendors.
Qatar told a mixed tale: Qatar’s non-energy private sector signaled sustained growth in business conditions in September, with boosts to employment rates and new orders despite a slight decrease in purchasing activity and a pause in output, according to Qatar Financial Center’s PMI (pdf). Qatar’s headline number eased to 51.7 in September, down from 53.1 in August and slightly below the long-run trend level of 52.3.
The appetite for goods and services continued to increase, leading to an expansion in business operations. The 12-month outlook for activity strengthened to its highest since March 2023. Although cost pressures recorded their highest in over four years, charges for goods and services fell sharply.
Employment saw a record high: Employment rates were the largest contributor to the headline figure in September, as the non-energy private sector expanded its workforce at the fastest rate on record, exceeding its previous January 2019 peak. The boost in job creation reflected business expansions, although total business activity dampened.
Some businesses rose, some paused: Output saw a pause in the construction sector, but activity rose across the manufacturing, services, finance, as well as wholesale and retail sectors. Although September saw a rise in new businesses, purchasing activity softened as firms reported broadly stable inventory holdings.
Lebanon is in trouble: Lebanon’s non-energy private sector activity slumped to a 33-month low in September, weighed down by a sharp decline in output and new orders due to escalating geopolitical tensions and growing security concerns, according to Blominvest Bank’s Lebanon PMI (pdf). September’s readings saw its headline figure fall to 47.0 in September, down from 47.9 in August.
Limited domestic demand for essential goods drove a large decline in output, new orders, and new exports. Output prices surged as international buyers diverted away due to increased shipping costs and supply chain disruptions, which surged purchasing price inflation to a three-month high.
Business activity decreased at large across Lebanon, with several firms lowering their buying activity, albeit at a softer pace than in August. Stocks of purchased items remained unchanged after three consecutive months of inventory growth. The slowdown in procurement activity parallels an uptick in purchase prices, primarily affecting shipping costs. Input changes surged to their quickest pace in three months, and output charges marginally climbed up.
A silver lining? Employment levels remained broadly stable, in line with a trend seen during the past months in summer 2023.
A bleak forecast for Lebanon: Rising regional tensions continue to pummel confidence. “Lebanon stands at a pivotal moment, desperately needing stability to revive its struggling economy, without much hope of attaining it soon,” research analyst Mira Said said in the Blom report.
Sentiment remained high in Kuwait + Qatar: Kuwait’s non-oil outlook in September remained strong, as the boost in confidence predicted a rise in business activity in the upcoming year. Meanwhile in Qatar, the next 12 months rest on a strong outlook as firms eye investments in key sectors and a boost in consumer demand.
