Kuwait's non-oil private sector growth hits one-year low

Kuwait's non-oil private sector continued its expansion in September, though at a noticeably slower pace, with growth in both output and new orders reaching one-year lows. This assessment comes from the latest S&P Global Kuwait Purchasing Managers’ Index (PMI).

The headline PMI registered 52.2 in September, a dip from August’s 53.0. While this marks the thirteenth consecutive month above the 50.0 no-change threshold, it represents the weakest improvement recorded since February.

Output and new orders maintained a solid, albeit slower, expansion. Companies attributed these gains to promotional activities, competitive pricing strategies, and advertising efforts which successfully secured new business. In a notable counter-point, new export orders accelerated to a three-month high, a boost partly driven by discounting strategies.

However, employment growth remained marginal throughout September, primarily constrained by cost considerations. This reluctance to expand payrolls contributed to a twelfth consecutive month of accumulating outstanding business.

Andrew Harker, Economics Director at S&P Global Market Intelligence, commented on the situation, stating, "Although there were further signs of a growth slowdown in Kuwait’s non-oil private sector in September, rates of expansion remained solid so there is little cause for alarm at this stage."

Purchasing activity and inventory levels continued their upward trend, albeit at the slowest pace in six months. Some firms strategically took advantage of competitive prices to stock up for future needs. Vendor performance, while still improving, saw only marginal gains in delivery times, marking the least significant enhancement in four and a half years. While competitive pressures among suppliers occasionally expedited deliveries, staff shortages at vendors limited their overall capacity to deliver promptly.

Inflationary pressures held relatively muted. Input costs rose marginally faster than in August, yet registered the second-slowest pace since late 2022. Businesses reported higher expenses for maintenance, spare parts, stationery, transportation, utilities, alongside slight increases in staff costs. To safeguard profit margins, output prices saw their seventh consecutive monthly increase, though the overall inflation rate remained modest.

Despite the tempered growth, business confidence saw an uptick from August levels. Companies voiced optimism regarding future output growth, attributing this to competitive pricing, new product development, strong customer service, and enhanced product visibility via advertising and customer recommendations.

Harker reaffirmed this outlook, adding, "Firms remain confident that their pipeline of work will be sufficient to keep output rising over the coming year. Nevertheless, the slowdown in growth is unlikely to improve the hiring situation, with firms remaining reluctant to commit to material increases in employment despite a sustained build-up of outstanding business."