The Purchase Managers Index (PMI), published by BlomInvest, registered 45 points in October 2024, down from 47 in the previous month in Lebanon. This is the lowest figure in forty-four months. Business confidence also fell to its lowest level in sixteen months.
Commenting on the figures, Fadi Osseiran, Managing Director of Blom Business Bank, stressed that the decline reflected the deterioration in business activity in the private sector.He attributes this to a significant drop in production indicators, new orders and export orders due to the intensification of the war between Israel and Hezbollah.
Additionally, Lebanese companies reduced purchasing activities due to supply chain disruptions, and had to draw on their inventories, which in turn decreased for the first time since May 2024. Purchasing costs for Lebanese private sector companies have also risen due to increased supplier tariffs.
He added that the inflation in purchase prices has risen, and that companies have opted to pass this increase on to customers.
Furthermore, despite the significant drop in production indicators and new orders, the employment index fell very slightly, as the majority of companies did not change the number of employees.
Finally, Lebanese private sector companies hold a pessimistic outlook for business activity in the coming year, with 84% of surveyed companies expecting a decline in activity levels over the next twelve months.
Regarding the supply side of the Lebanese private sector economy, data from the October survey reveals that the war between Israel and Hezbollah has disrupted supply chains. Supplier delivery times have lengthened at a record pace since March 2023, as the war has hampered the transportation of goods, particularly by land. In addition, due to security concerns, Lebanese companies have reduced their purchasing activities at the fastest pace since July 2021.
The PMI is an indicator based on the monthly results of 400 companies, measuring private commercial activity. A reading below 50 indicates a decline in activity, while a decrease from the previous month suggests that the downturn is ongoing.
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