Lebanon’s private sector economy suffered more contraction in August due to a deterioration in business conditions and political tensions, BLOM PMI showed.
“Contraction in the private sector’s economy accelerated in August as the BLOM PMI declined further to 47.8. The index remained below the neutral mark of 50, separating economic contraction from growth, for the 26th successive month,” BLOM said in its monthly report.
It added that downturn was mainly on the back of overall deterioration in business conditions especially the fastening declines in companies’ output levels, incoming new orders and new work from abroad.
Commenting on August’s PMI results, Fadi Osseiran, general manager at BLOMINVEST Bank, said: “Once again, the month of August has offered more proof that the deep political divisions on the country’s key issues are behind the slackening business activity within the Lebanese private sector.”
He added that BLOM Lebanon PMI revealed the sharpest monthly contraction since September 2014 with output and new orders’ levels decreasing at a faster pace than that of the previous month.
“Foreign demand also tightened over the same period as export orders maintained their downward trend to hit a six-month low. Besides the continuous failure in electing a new president, the political bickering between the different parties inside the Cabinet is paralyzing public policy,” Osseiran said.
BLOM said that the lack of pressure on businesses’ resources was further highlighted by a decrease in backlogs of work during August, the seventh in the past eight months and the fastest for one year.
“Elsewhere, August data pointed to an improvement in suppliers’ delivery times. Prices paid for purchased items, meanwhile, decreased, leading to an overall fall in cost burdens faced by Lebanese firms for the third consecutive month,” BLOM said.
It added, however, that average salaries were broadly stable.
“Lower input prices were passed on by businesses to their clients, with output charges down for the fifth consecutive month in August. That said, the rate of decline was the weakest in this sequence and only marginal,” the BLOM report said.
