Kuwait’s PMI Rises to 52.9 as Egypt’s Non-Oil Sector Continues to Contract
Key Facts
Kuwait’s non-oil Purchasing Managers’ Index rose to 52.9 points in October, from 52.4 points in September, remaining above the neutral 50 mark for a fourth consecutive month, according to a report carried by CNBC Arabia citing the index. A reading above that level signals expansion in activity, while the increase in the index reflects acceleration from the previous month. The improvement was accompanied by growth in new orders for a fourth straight month, with the rate of increase reaching its fastest since February. Companies’ output also rose for a fourth consecutive month, and its growth accelerated compared with September. These components point to continued expansion in Kuwaiti activity during the month, alongside simultaneous cost pressures on companies.
The acceleration in Kuwait’s new orders followed three consecutive months of expansion, while their growth rate in October was the strongest since February, according to the report. Output continued its upward path for a fourth month after returning to growth in July, and grew faster than in September. Business confidence also improved for a fourth consecutive month, reaching its highest level since February. These indicators show continued improvement in demand, output and sentiment, which accompanied the rise in the headline reading. The report does not identify regional demand as the cause of this growth, but it records an increase in export orders alongside the acceleration in new orders.
By contrast, Egypt’s non-oil private sector contracted for a tenth consecutive month, with the Purchasing Managers’ Index steady at 47.2 points in October, according to a reading carried by Trading Economics citing S&P Global. The reading remained below the neutral level, consistent with continued declines in activity. Companies’ output and new orders fell at their fastest pace in four months amid weak customer demand, declining purchasing power and the ongoing conflict in the Middle East. Surveyed companies said weak markets, higher prices and declining purchasing power weighed on new business and output. Thus, the headline index was unchanged even as some of its operational components deteriorated during the month.
Pressure in Egypt extended to the labor market and work in progress: companies returned to cutting jobs after two months of hiring, and backlogs declined for the first time since January. Input cost inflation accelerated to a five-month high, and companies responded by raising selling prices at the fastest pace since June to pass on some of the cost increases. At the same time, business confidence fell to a seven-month low. Companies attributed the decline in confidence to persistent inflation, geopolitical tensions and supply-chain disruptions. These details show that weak demand coincided with rising cost burdens, prompting companies to reduce employment and raise selling prices.
S&P Global says October’s Egyptian reading is consistent, based on the historical relationship its model uses between the index and gross domestic product, with estimated annual GDP growth of about 4.3%. This annual estimate differs from the index’s monthly signal of contraction in non-oil private-sector activity, and does not change the fact that the survey reading has indicated contraction for a tenth month. In Qatar, the index stood at 47.3 points in September, down from 47.6 in August, as the non-energy private sector continued to contract for a seventh month. Business activity declined in nine of the ten months through September. New orders also contracted for a tenth month, and the pace of decline was the fastest since June, despite companies’ outlook for activity over the next twelve months remaining positive and improving from August. These Qatari figures are for September and do not include an October reading.
On costs in Kuwait, the increase in input prices accelerated in October to its fastest pace since February, according to the report. By contrast, output prices rose at a slightly weaker pace than the peak recorded in September 2021. This means Kuwait’s improved activity coincided with accelerating input costs, while the increase in selling prices did not reach that earlier peak. The report gave no figures for the size of the increase in costs or output prices. The available information also does not include financial-market reactions to the index readings.