Breaking down non-oil private sector performance in Kuwait, Qatar, and Lebanon in July: Purchasing manager indices (PMI) tracking non-energy sectors brought mixed results across the three countries. Kuwait sustained solid growth, and Qatar also continues to expand, but at a slower pace. In contrast, Lebanon remained under pressure amid deteriorating business conditions.

REMEMBER- The all-important 50.0 mark is the threshold separating contraction from growth. Anything above 50 denotes expansion, while anything below indicates contraction.

KUWAIT-

Non-oil private activity in Kuwait maintained solid growth in July, supported by a strong increase in new orders and business activity, according to S&P Global’s PMI (pdf). The country’s headline reading inched up to 53.5 in July from 53.1 in June. While July reading puts Kuwait above the 50.0 mark for healthy growth for its eleventh consecutive month, it is still below April’s 54.2 reading — the highest headline figure for the nation in over five months.

New orders increased sharply during the month, extending the expansion streak that began in February 2023. This rise was attributed to increased advertising and price discounting. While new export orders also rose, their growth rate slowed to its lowest level in three months. This increase in new orders, along with export,s helped bolster the sector’s output again during the month.

Output price inflation eased in July, reaching a four-month low. Some firms noted that efforts to secure new orders through price discounting curbed the extent to which rising input costs were passed to customers. Meanwhile, inflationary pressures softened at the start of 2H 2025, with purchase prices and staff costs rising at the slowest pace in six and four months, respectively.

Firms maintained staffing levels broadly unchanged during July, following a record high in the previous month. While some companies hired new staff to complete projects on time, others delayed recruitment due to cost concerns. A combination of subdued hiring amid a sharp rise in new orders led to another increase in backlogs of work during the month. “Firms will have been cheered by a softening of inflationary pressures during the month, but the reluctance to hire extra staff did mean that backlogs of work accumulated again,” S&P Global’s Andrew Harker said. However, the rate of accumulation was modest and the slowest recorded since January.

Strong optimism persists as firms embrace digital strategies: Competitive pricing helped bolster firms’ confidence in the 12-month outlook for output, with some companies announcing plans to adopt diverse marketing strategies — particularly through using digital channels. Although sentiment dipped to a three-month low, businesses remained strongly optimistic about output growth in the year ahead.

Positive business outlook: "The prospects for further expansions in new business in the months ahead appear bright, and we'll hopefully see this reflected in renewed hiring activity soon,” Harker noted.

Kuwait on top: “The only Gulf economy to record an improvement in its PMI last month was Kuwait, where it increased from 53.1 in June to 53.5. In the round, the PMIs suggest that activity in non-oil sectors across the Gulf cooled off at the start of 3Q,” Capital Economics’ James Swanston wrote in a recent research note seen by EnterpriseAM.

What’s next for the Gulf overall? “We think that activity in non-oil sectors across much of the Gulf will continue to soften over the coming quarters. Low oil prices will more than offset rising output volumes and, in turn, export receipts will be weaker this year than last. Current account and budget balances will deteriorate, prompting officials to make fiscal policy less supportive,” Swanston noted.

QATAR-

Non-oil activity in Qatar continued to grow in July, but at a slower pace, with the S&P Global PMI (pdf) remaining above the no-change mark of 50.0 for the 19th consecutive month. Qatar’s headline fell to 51.4 in July, from 52.0 in June, with the moderation in the headline driven by a faster decline in new orders, weaker output growth, and faster suppliers' delivery times, though these were partially offset by higher employment growth and increasing input inventories.

Demand weakened in July, leading to a weaker outlook: New business volumes dipped during the month, with demand contracting for the fifth time in 2025. July’s demand dip, which was the steepest since February, was particularly noted in the services and construction sectors, although new work did rise in manufacturing and wholesale and retail. The sustained fall in new orders led to a moderation in the year-ahead outlook.

Employment in the non-energy private sector rose at the second-strongest rate on record, with the only higher rate posted in February. Job creation in July was rapid in three of the four monitored sectors, with construction companies reporting a more modest increase. This strong employment growth contributed to a sharp increase in wages, which was the third-highest on record despite easing slightly from June.

Non-oil activity increased, leading to a rise in input stocks: Purchasing activity grew for the third time in four months as firms sought to replenish their inventory levels. As a result, the level of inputs held in stock rose for the first time in three months. Meanwhile, backlogs of work increased for the eighth consecutive month.

Falling charges offset rising purchase prices and wages: Purchasing price inflation rose in July, accelerating from June's 11-month low. This, combined with the sharp increase in wages — which was the third-highest on record, put upward pressure on costs. Despite these cost pressures, companies reduced their prices at the fastest rate in 10 months, continuing a trend of falling prices for the 12 consecutive months.

Outlook moderated but remained positive: Firms remained optimistic about the year ahead outlook for activity. However, the strength of this sentiment was the weakest in a year. This outlook was supported by anecdotal evidence linking positive sales forecasts to factors like investment, tourism, and government initiatives.

OVER IN LEBANON-

The Lebanese non-energy private sector continued to face deteriorating business conditions in July, according to Blominvest Bank’s Lebanon PMI (pdf). The nation’s headline figure dropped to 48.9 in July, from 49.2 in June, indicating a slightly faster decline in operating conditions. Despite this, the PM reading remained above its long-term average of 46.9, signalling a marginal contraction overall. “This result was not unexpected as the economy lacked any meaningful demand stimulus: the government does not have any money to spend and the private sector is not able and willing to spend,” Blominvest Bank’s Ali Bolbol wrote in the report.

New orders fell at the quickest pace since March: New orders declined for the fifth consecutive month, with the pace of July’s contraction being the sharpest since March. This was largely due to a sharper reduction in new orders from non-domestic customers. The decline in new export business was the steepest since November of the previous year. Regional insecurity and conflicts across the Middle East led to a decline in tourism and caused foreign clients to refrain from placing orders with local companies, according to the report.

Firms curbed purchasing to reduce costs: Private sector companies reduced their purchasing volumes in July. This reduction, the sharpest in eight months, was part of an effort by firms to save costs. Despite this decrease in buying activity, stocks of purchases still saw a fractional increase.

Negative outlook: Businesses remained pessimistic about the year-ahead outlook for activity. This is primarily due to concerns about a potential escalation of conflict and tensions across the region, along with broader security concerns.

Not all gloom, with signs of economic flexibility emerging: “The only good news is that the resulting economic implications could have been worse, which indicates a glimmer of hope regarding the economy’s flexibility and potential,” Bolbol noted.

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