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Lebanon’s Purchasing Managers’ Index (PMI) rose to its highest in three months in December, but still indicated a prolonged deterioration in operating conditions of private sector businesses.
However, the outlook for 2022 is pessimistic as businesses expect the political and economic situation to deteriorate over the year.
The BLOM Lebanon PMI indicator reached 46.7, up from 46.1 in November, with anything above 50.0 indicating an improvement in business conditions.
Tala Nasrallah, Senior Research Analyst at Blominvest Bank, said: “The month of December witnessed further depreciation of the Lebanese currency, with output prices increasing at the fastest pace for five months, resulting in rising inflationary pressures.
“The BLOM Lebanon PMI rose to 46.7, ending 2021 on a higher note than the past three months, yet it is indicative of a prolonged deterioration in private sector operating conditions and the static facets of the Lebanese economy.”
According to the PMI survey, new orders declined at weaker rates during the month. Also, employment fell for the second month running as private sector firms registered a greater amount of spare capacity.
“It is worth mentioning that falling purchasing power is facilitating a continuous slowdown in demand and new orders, and a decline in employment as a result. As such, prompt action is vital by the new government while going into 2022 to avoid the crisis from deepening,” Nasrallah said.
Overall, input costs and selling prices both increased at the quickest rates in five months.
According to survey respondents, the challenging political and economic situation in Lebanon was a notable hindrance to their business operations in December and a key reason for private sector output falling over the month.
“However, the rate of contraction in business activity was the weakest since September. Output volumes were also suppressed by weak demand conditions,” the report noted.
(Reporting by Imogen Lillywhite; editing by Seban Scaria)
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