Lebanon’s private sector continued to reel under the severe economic slowdown as output and new order of goods by companies declined, according to BLOM PMI for the month of August.
“The private sector companies witnessed faster contractions in output and new orders during the month of August. This was reflected by Lebanon’s monthly Purchasing Managers’ Index,” BLOM PMI said Monday.
The report was published by BLOMINVEST Bank and compiled by Markit.
Commenting on August’s PMI results, Ali Bolbol, economic adviser at Blominvest Bank, noted that “There were no surprises in August’s 2016 PMI results for Lebanon. Headline PMI fell to 45 from 45.5 recorded in July 2016, signifying a slightly faster deterioration in business conditions.”
He added that all sub-indices performed badly, with the sharpest declines registered for output and new orders.
“Particularly worrying was the decrease in the prices for final goods and services, the sharpest since March 2016. This is because it translates to further increases in real interest rates, making it harder for businesses to manage their cash flow and to service their debt. If only politicians can read intelligently these endless deteriorating business conditions, and provide the country with the needed political and economic respite,” Bolbol explained.
The report explained that private sector companies recorded a drop in business activity in August, in line with the trend observed in each month since June 2013.
“Survey evidence suggested that political uncertainty and cash flow issues acted to weigh on market demand, which was manifested in a further decrease in the level of new business received by firms. Moreover, both output and new orders fell at slightly faster rates than in July,” the report said.
It added that there was a drop in the amount of new work received from abroad, the 13th in as many months. “With companies recording falling inflows of new orders as well as lower levels of work-in-hand, further job losses were reported across the private sector economy in August. The extent of the decrease in employment was only marginal, and the weakest recorded in six months,” the report said.
It also noted a decline in other business activities such as hiring new staff members in companies.
“Quantities of purchases among Lebanon’s businesses fell for a seventh consecutive month in August. That said, similar to employment, the rate of decline was the slowest seen since February. Meanwhile, inventory levels rose at the fastest pace since March,” the report said.
