How Kuwait + Qatar + Lebanon’s PMI performed in June: Purchasing Manager Indices (PMI) tracking non-energy sectors in Qatar and Kuwait both saw growth attributed to robust demand, new orders, and output. Over in Lebanon, geopolitical concerns resulted in low business performance and a somber outlook.

Refresher- 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, Qatar: Qatar’s PMI sustained record growth in June, as boosts to new orders, employment, output, and purchasing buoyed the index, according to Qatar Financial Center’s PMI (pdf). Qatar’s headline number jumped up to 55.9 in June, from 53.9 in May — the biggest improvement in business conditions in two years — placing it above the 50.0 threshold.

New orders grew at their fastest pace in over a year, with businesses reporting a boost in customer numbers, attributable to new branch openings and marketing campaigns. Expansion was predominantly recorded in manufacturing and construction, but also remained strong in other sectors. Output also rose, increasing at the sharpest rate recorded in a year-and-a-half.

Employment is up: The employment rate rose in June, propelled by output and new order growth, business expansion, and the need for highly skilled staff, mainly in the wholesale and retail and service provider sectors.

Purchasing activity rose for the fourth month straight: Lead times advanced and firms were able to cut down backlog volumes despite the increase in demand for goods and services. Cost pressures did see a marginal increase in June, attributed to growing average purchase prices and staff costs. However, prices charged for goods and services dropped.

Over in Kuwait: Kuwait’s non-energy private sector signaled modest improvement in business conditions in June, as output, new orders, and purchasing activity all grew at a faster pace compared to the previous month, according to Kuwait’s S&P Global PMI (pdf). Kuwait’s headline number dipped to 51.6 in June, down from 52.4 in May, signaling softer improvement in its non-oil sector at the start of 2Q.

Input costs rose and inflation rates eased for the third month: Input buying and stock purchases both grew in June, with a rise in new orders pushing firms to boost their purchasing activity on the back of competitive pricing. Despite growing input costs, the rate of inflation was its lowest level for the third month in a row.

Employment rates grew to their highest rate on record due to increases in output and new orders with lead times shortened in June and suppliers quickening delivery times. Increased employment rates were not strong enough to support the rate of new order growth resulting in backlogs.

Shifting over to Lebanon: Lebanon’s private sector economy diminished in June, driven by a downturn in new orders and outputs due to rising national security concerns and geopolitical tensions, according to Blominvest Bank’s Lebanon PMI (pdf). The reading saw a slight drop in its headline figure to 47.8 in June, down from 47.9 in May, settling firmly below 50.0.

Falling new orders constrained output: Lebanon’s private sector business activity dipped as new orders declined. New export orders dropped for the 11th month straight as regional tension and instability persisted, negatively impacting foreign customer intake. Diminished purchasing power led to a softened sales performance, with domestic security concerns regarding the border conflict between Israel and Hezbollah weighing down the economy. The volume of purchases grew slightly despite shrinking output needs, resulting in a noteworthy boost in suppliers’ delivery times and businesses’ expanding their stock levels.

Inflationary pressures sharpened, with overall operating expenses growing at their quickest rate in 15 months, which has been attributed to increasing shipping and ins. costs causing companies to raise their prices to safeguard their margins in June. A global spike in raw material costs also added to inflationary pressures.

Sentiment remained optimistic in Qatar + Kuwait: Qatar’s outlook remained strong in June, with firms’ confidence up, reporting positive forecasts for the next 12 months, due to business expansions and new orders. Similarly, in Kuwait businesses remained confident, with positive marketing and advancing economic conditions driving optimism.

But Lebanon remained somber: Businesses remained concerned in Lebanon, reflecting the highest level of pessimism in nearly a year over the uncertain state of security in the country. A handful of companies say they expect demand to worsen in line with a drop in tourism as a consequence of conflict at Lebanon’s border. “The only decent indicator is that employment stayed steady – maybe a sign that employers are hopeful,” said BLOM Chief Economist Ali Bolbol.

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