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Lebanon’s BLOM Purchasing Manager’s Index (PMI) rose to 47.1 in January, the highest for seven months, but still indicates a challenging business environment in the country.
The PMI score for January was still well below the 50.0 mark which indicates improving business conditions, as businesses faced challenges posed by political and economic uncertainty and the high cost of US dollars weighed on demand conditions and pushed up operating, the report for January said.
Firms reported growing spare capacity due to reduced workloads, leading some businesses to reduce their staffing levels.
January’s index rose to 47.1 in January from 46.7 in the previous month, but intakes of new business also fell during the month
“Many businesses commented on a deterioration in purchasing power among domestic clients due to the high cost of US dollars. Meanwhile, new work from international clients fell, reportedly due to the challenging political and economic climate within Lebanon,” the report said.
Dr Fadi Osseiran, general manager of BLOMINVEST Bank, said: “Lebanon started the year on a relative positive note as the month of January witnessed steady appreciation of the Lebanese currency while Lebanese Government met for the first time in months and discussed State Budget days before the start of negotiations with the International Monetary Fund.”
He added: “Overall, the situation signals ‘good intentions’ on the part of the government coupled, as importantly, with significant improvement in the Lebanese currency due to the intervention of the Central Bank to stabilise it.
“Amid this environment of ‘cautious optimism’, we hope to see the start of reform measures that aim at regaining confidence and restoring recovery and that would avoid deepening the crisis in the upcoming period.”
The report also showed that overall input costs increased, which firms largely attributed to weakness in the domestic currency against the US dollar, and overall operating expenses have increased every month for the past four months.
Elsewhere, buying activity continued to fall, while stocks of purchases decreased fractionally.
There was also a deterioration in supplier performance during January, which panel members linked to payment issues.
Business expectations remained pessimistic in January, the report concluded, with uncertainty making it challenging for firms to accurately forecast activity over the coming year, although in many cases, the operating environment is still expected to worsen.
(Reporting by Imogen Lillywhite; editing by Brinda Darasha)
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