BLOM Lebanon PMI®

Data collected March 12-25

• Fastest output decline in 2019 so far
• Accelerated contraction in new orders, partly driven by exports
• Firms cut their output charges for thirteenth straight month

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This report contains the latest public release of data collected from the monthly survey of business conditions in the Lebanese private sector. The survey, sponsored by Blominvest Bank and compiled by IHS 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.

At 46.3 in March, the BLOM Lebanon PMI fell from 46.9 in February. The latest reading pointed to the fastest deterioration in Lebanese private sector business conditions during the year so far.

Commenting on the BLOM PMI for March 2019, Dr Ali Boblol, Chief Economist of BLOM Bank, said:

“The rise in the PMI of February 2019 to 46.9 was short lived, for the PMI of March 2019 fell back to 46.3. The fall was the result of fast declines in output and exports that worsened excess capacity and could not be stemmed by lower output prices. It seems that political instability that presumably ended with the formation of the new government was replaced by more economic uncertainty arising from the complete inaction of the government on the economic and reforms fronts. One wonders when the private sector and the long-suffering economy will get the reprieve that they deserve!”

The main findings of March’s survey were as follows:

The latest decline in operating conditions was partly driven by a sharp contraction in output, which many panellists linked to the ongoing political uncertainty. March's reduction in business activity was historically marked and the quickest since December 2018.

There was also a decrease in new orders placed at Lebanese private sector firms. The rate of contraction was the quickest recorded in 2019 so far, which was partly driven by the sharpest reduction in export sales for seven months.

In response to weaker demand, firms attempted to increase their competitiveness with a further cut to average output prices. Businesses have now reduced their charges in every month for just over a year. That said, the rate of decline was virtually unchanged from February and softer than the average over the aforementioned period.

Private sector companies in Lebanon continued to reduce their staff numbers at the end of the first quarter. The rate of job cutting was marginal overall and broadly in line with that in February. Firms also recorded a decrease in purchasing activity, although the rate of contraction eased to its slowest in a year.

Meanwhile, capacity pressures continued to ease in March, as backlogs of work fell for the forty-fifth month in a row. The rate at which incomplete business contracted was the fastest in the past six months.

Input costs faced by private sector firms in Lebanon were broadly stable during March. The stagnation was primarily driven by virtually constant purchase prices and only a slight fall in wage costs.

Finally, March's survey data revealed continued negativity towards the business outlook among private sector companies. Concerns over political stability continued to weigh on sentiment, as the degree of negativity rose from February.

-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 

IHS Markit:

Eliot Kerr, Economist                                                                                  Joanna Vickers, Corporate Communications
Telephone +44-203-159-3381                                                                Telephone +44-207-260-2234

Email eliot.kerr@ihsmarkit.com                                                                Email joanna.vickers@ihsmarkit.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 GDP and company workforce size. 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.

IHS 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 IHS Markit. Please contact economics@ihsmarkit.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 IHS Markit ( www.ihsmarkit.com )

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2019 IHS Markit Ltd. All rights reserved.

About PMI

Purchasing Managers’ Index™ (PMI^®) surveys are now available for over 40 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 https://ihsmarkit.com/products/pmi.html .

The intellectual property rights to the BLOM Lebanon PMI® provided herein are owned by or licensed to IHS Markit. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit’s prior consent. IHS 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 IHS 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. IHS Markit is a registered trade mark of IHS Markit Ltd. and/or its affiliates.

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© Press Release 2019