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Business conditions in Lebanon as indicated by the seasonally adjusted IHS Markit Purchasing Managers' Index (PMI) continued to plunge in September, but at a slower pace than in August.
September’s PMI reading of 42.1 was an improvement over August's 40.1, but it nevertheless marked a continued deterioration in Lebanon's private-sector business conditions. The latest downturn was partially driven by a further decline in output at the end of the third quarter.
Dr Ali Bolbol, Chief Economist and Head of Research at BLOM Bank, said, "Though the PMI increased to 42.1 in September 2020 from 40.1 in August 2020, the business conditions remain markedly bad."
Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show a deterioration.
While new orders received by Lebanese businesses continued to fall during September. Disruption related to the Beirut port explosion, as well as difficulties in securing US dollars affected the fall in business activity.
"Notwithstanding the current Corona epidemic, it is quite apparent that private sector fortunes will not turn around unless there is a government reform and recovery plan that takes measures to restore confidence in the banking system and the exchange rate regime and to bring good governance to public administrations, aided by sizeable concessional funding from outside," Bolbol said.
Amid a further reduction in new business, private sector firms continued to cut their staff numbers in September.
The result extended the current sequence of workforce contraction that began in September 2019. The rate of job shedding was modest, and little changed from August.
(Reporting by Seban Scaria; editing by Daniel Luiz)
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