A closer look at Kuwait, Qatar and Lebanon’s non-oil sectors in August: Purchasing manager indices (PMI) tracking non-energy sectors brought similar trends across the three countries. Kuwait and Qatar saw continued improvement in their non-oil sector, while Lebanon finally joined the expansion territory with its headline PMI climbing to 50.3 in August, crossing the 50.0 no-change threshold for the first time since February.

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 activity in Kuwait saw further improvement in business conditions in August, although this comes with some indicators that growth was slowing, according to S&P Global’s PMI (pdf). The country’s headline PMI slightly fell to 53.0 in August, from 53.5 in the previous month. This marks a full year of monthly improvement in the non-oil private sector. August reading puts Kuwait above the 50.0 mark for healthy growth for its twelfth consecutive month, marking a full year of monthly improvement in the non-oil private sector.

New orders and output continued to increase notably during August, but the pace of expansion for both was the slowest it’s been in six months. Firms cited advertising and competitive pricing as key factors behind this growth in new business and activity. New export orders from customers in neighboring countries also increased.

Despite the rise in customer orders, the rate of job creation was minimal due to a slowdown in new business growth. As a result, outstanding business accumulated for the eleventh month in a row, accelerating slightly compared to July.

Purchasing activity increased at a marked pace in August, a trend that accelerated from July. Firms increased their purchasing activity significantly in response to the rise in new orders, resulting in a rise in stocks of purchases, although the pace of accumulation softened.

Input costs slowed for the third consecutive month, reaching their weakest level since December 2022, with this marginal rise observed in both purchase prices and staff costs. “Inflationary pressures also eased, however, providing welcome respite for firms on the cost front and enabling competitive pricing policies to be maintained,” S&P Global’s Andrew Harker noted.

Business confidence falls to a six-month low: Firms’ sentiment regarding the upcoming year’s output also weakened in August, dropping to a six-month low, but remained above the series average. “We will hopefully see job creation strengthen in the months ahead, but firms will likely wait and see if the demand picture strengthens before committing to new hires,” Harker wrote.

QATAR-

Non-oil activity in Qatar improved further in August, mainly underpinned by a record rise in employment and positive momentum in business outlook, according to the S&P Global PMI (pdf). The country’s headline index increased to 51.9 in August, up from 51.4 in July, marking the 20th consecutive month that the index has remained above the 50.0 no-change threshold, but slightly below the long-run trend since 2017.

“Barring an abrupt reversal in September, overall growth in the third quarter looks set to outperform that signalled over the first half of 2025,” S&P Global’s Trevor Balchin noted in the report.

Employment surges at a record pace: Firms saw the fastest rate of job creation in the survey’s history during the month, with this recruitment being seen in sales, marketing, operations, as well as management. All four monitored sectors recorded rapid workforce growth, with manufacturing and construction seeing record jumps.

Output was broadly stable, but backlogs rose: Total business activity was stable in August, following increases in three of the previous four months. Despite the record rise in employment, a build-up of outstanding orders occurred for the ninth consecutive month, indicating continued pressure on capacity.

Purchase prices and input costs modestly declined: While the rate of staff cost inflation eased to a three-month low, it remained among the highest on record. Meanwhile, average purchase prices increased at a more modest pace, leading to a slight drop in overall input costs for the first time in five months. Prices charged for goods and services dipped at the quickest pace since December 2018, signaling pressures on profitability.

Business sentiment surges to a seven-month high: Firms’ outlook for business activity for the year ahead was the strongest since January, with companies pointing to market expansion, an increasing population, real estate growth, and a recovery in construction and tourism as the key factors behind this positive prospect. “The year-ahead outlook for activity brightened, with the future activity sub-index rising strongly to a seven-month high and back above its long-run trend,” Balchin noted.

The bigger picture: Looking ahead, non-oil sector activity across much of the Gulf is forecast to moderate, Capital Economics’ James Swanston noted in a recent research note seen by EnterpriseAM. “Low oil prices will more than offset rising output volumes and, in turn, export receipts will be weaker this year than last,” Swanston wrote, adding that “current account and budget balances will deteriorate, prompting officials to make fiscal policy less supportive.”

OVER IN LEBANON-

The Lebanese non-energy private sector saw an improvement in August, with new orders, business activity, and purchasing volumes all expanding at their fastest rates since February, according to Blominvest Bank’s Lebanon PMI (pdf). The headline PMI climbed to 50.3 in August, up from 48.9 in July, marking the first time the index has crossed the 50.0 no-change threshold since February.

“It seems that strong government action played a role, notably the move to centralize weapons under state control—a key step toward stability, ending Lebanon’s regional isolation and attracting foreign investments,” Blominvest Bank’s Mira Said wrote in the report. However, Mira cautioned that PMI’s rebound could be temporary, stressing that continued growth will require “deeper reforms and—critically—greater political stability.”

New orders saw their first expansion in six months, mainly driven by domestic customers, as new export sales continued to decline, though the pace of contraction was the softest in the current six-month sequence of decline. This growth in demand put pressure on operating capacities, leading to an increase in backlogs for the first time in three months.

Output also rose for the first time since February: Firms increased their output volumes, in line with new orders growth, with this expansion in business activity being the first since February. Despite the increase in demand and a rise in backlogs, firms managed the additional workload with existing staff, as employment levels were broadly unchanged from July.

Companies increased their purchasing activity for the first time in five months. This growth in buying activity, alongside stable supply chain conditions, allowed firms to build up their inventories. Stocks of purchases were accumulated for the second consecutive month, and at the quickest pace since February.

Cost and selling price inflation eased to a one-year low: Overall operating expenses picked up in August, with participants pointing to increased import and wholesale prices as sources of inflation. However, the rate of rise in total input costs was only slight and the softest since the beginning of the year.

Business confidence improves but remains downbeat: Firms remained pessimistic about their year-ahead outlook, albeit this level of pessimism was significantly lower than the previous two months. Firms expressed hope for an improvement in market conditions.

ELSEWHERE IN THE REGION-

  • In the UAE, the non-oil private sector continued to lose momentum in August, with the headline PMI pdf coming in at 53.3 from a 49-month low of 52.9 in July;
  • In Saudi Arabia, Non-oil business activity saw a robust improvement, boosted by new orders, with the seasonally adjusted figure coming in at 56.4 (pdf) ;
  • Egypt saw a modest contraction in its non-oil private activities (pdf), with the headline PMI recording 49.2, marking a slight acceleration in contraction from July’s 49.5.
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