Data collected 13-27 January
- BLOM PMI falls to record low of 44.7
- Sharp and accelerated decreases in output and new orders
- Job creation recommences, albeit at marginal pace
This report contains the fourth public release of data collected from the new monthly survey of business conditions in the Lebanese private sector. The survey, sponsored by Blominvest Bank and compiled by Markit, has been conducted since May 2013 and provides an early indication of operating conditions in Lebanon. The headline figure derived from the survey is the Purchasing Managers' Index (PMI).
The PMI is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30%), Output (25%), Employment (20%), Suppliers' Delivery Times (15%) and Stocks of Purchases (10%). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
January saw Lebanon's private sector economy contract at a faster rate, as signalled by the seasonally adjusted BLOM PMITM falling further below the neutral 50.0 threshold. At 44.7, down sharply from 49.0 in December, the headline index was the lowest in nine months of survey data collection and indicative of a marked deterioration in overall business conditions.
Commenting on the latest survey findings, Marwan Mikhael, Head of research at BLOMINVEST Bank said:
"The political and security environment continues to weigh down on business conditions in Lebanon. The two recent bombings perpetuated within a three weeks' timeframe pulled down the PMI to its lowest level in nine months of data collection. Wholesale, retail, hotels and restaurants, and construction sectors were obviously the most affected by the unstable security and political situation and appeared to be the ones that tilted the index heavily to the downside. Official data showing declining tourism and construction permits supports the survey results."
The main findings of the January survey were as follows:
Weighing on the headline index in January were sharp and accelerated decreases in output and new orders, the most marked since August in both cases. Behind these latest falls - the eighth in successive months respectively - were political instability and concerns over security, according to anecdotal evidence. Similarly, instability in the broader region also contributed to a fall in new export orders.
Despite these weaker trends in output and new business, there was a renewed increase in private sector employment following a slight fall at the end of 2013. That said, the pace of job creation was only marginal. This additional staffing capacity helped companies make further inroads into their outstanding business during the month, with the rate of backlog depletion the fastest in the short survey history.
Prices charged by private sector companies operating in Lebanon fell in January, reversing a fractional increase observed one month earlier. A number of firms had sought to boost sales through discounting, simultaneously absorbing higher input costs. Both purchase prices and staffing costs rose on the month, though the overall rate of inflation was only modest and weaker than in December.
January's survey showed a fall in purchasing activity amid decreased workloads. Stocks of purchases rose, however, as the degree to which buying levels decreased was much less marked than the concurrent drop in production. Lower purchasing activity meanwhile relieved some pressure on supply chains, with vendor lead times improving slightly for a second consecutive month.
-Ends-
For further information, please contact:
BLOMINVEST Bank:
Marwan Mikhael, Head of Research
Telephone +961-173-7247
Fax +961-175-1953
Email marwan.mikhael@blominvestbank.com
Markit:
Phil Smith, Economist
Telephone +44-1491-461-009
Email phil.smith@markit.com
Caroline Lumley, Director, Corporate Communications
Telephone +44-20-7260-2047
Mobile +44-781-581-2162
Email caroline.lumley@markit.com
The BLOM Lebanon Purchasing Managers' Index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies, which have been carefully selected to accurately represent the true structure of the Lebanese economy, including manufacturing, services, construction and retail. The panel is stratified by Standard Industrial Classification (SIC) group, based on industry contribution to GDP. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the 'Report' shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the 'diffusion' index. This index is the sum of the positive responses plus a half of those responding 'the same'.
The Purchasing Managers' Index (PMI) is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers' Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction.
Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease.
Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series. Historical data relating to the underlying (unadjusted) numbers, first published seasonally adjusted series and subsequently revised data are available to subscribers from Markit. Please contact economics@markit.com.
About BLOMINVEST BANK
BLOMINVEST BANK, established in 1994, is the investment arm of BLOM Bank SAL, one of the largest banks in Lebanon. As part of its expansionary vision towards the MENA region, the bank has established one investment arm in Saudi Arabia, "BLOMINVEST KSA" and launched three brokerage and trading firms in Egypt, Syria, and Jordan, namely "BLOM Bank Egypt Securities", "Syria and Overseas for Financial Services", and "Financial Services Experts Company". BLOMINVEST BANK is one of few institutions within the greater Levant region that offer Private banking, Investment banking, Asset Management, Brokerage, and Research services under one roof. Based on its track record, BLOMINVEST BANK to date remains the most awarded local investment bank. For more information, see www.blominvestbank.com.
About Markit
Markit is a leading, global financial information services company with over 3,000 employees. The company provides independent data, valuations and trade processing across all asset classes in order to enhance transparency, reduce risk and improve operational efficiency. Its client base includes the most significant institutional participants in the financial marketplace. For more information, see www.markit.com.
About PMI
Purchasing Managers' Index (PMI) surveys are now available for 32 countries and also for key regions including the Eurozone. They are the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to www.markit.com/economics.
The intellectual property rights to the BLOM Lebanon PMI provided herein are owned by or licensed to Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit's prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information ("data") contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index and PMI are either registered trade marks of Markit Economics Limited or licensed to Markit Economics Limited. BLOMINVEST Bank use the above marks under licence. Markit is a registered trade mark of Markit Group Limited.
Press Release 2014
