Kuwait’s non-oil private sector growth slows to one-year low

Investing.com -- Kuwait’s non-oil private sector continued to expand in September, but at a slower pace as growth in output and new orders weakened to one-year lows, according to the latest S&P Global Kuwait Purchasing Managers’ Index (PMI).

The headline PMI dipped to 52.2 in September from 53.0 in August, marking the thirteenth consecutive month above the 50.0 no-change mark. However, this represented the weakest improvement since February.

Both output and new orders continued to grow at solid rates, though slower than in previous months. Companies attributed these increases to promotional activities, competitive pricing strategies, and advertising efforts that helped secure new business.

New export orders bucked the trend by accelerating to a three-month high, supported by discounting strategies.

Employment growth remained marginal in September, with companies citing cost considerations as a limiting factor. This restrained hiring contributed to a continued accumulation of outstanding business for the twelfth consecutive month.

"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," said Andrew Harker, Economics Director at S&P Global Market Intelligence.

Purchasing activity and inventory holdings continued to rise, though at the weakest pace in six months. Some firms took advantage of competitive prices to stock up for future needs.

Supplier delivery times improved only marginally, the least extent in the current four-and-a-half year sequence of improving vendor performance. While competitive pressures among suppliers helped speed up deliveries in some cases, staff shortages at vendors limited their ability to deliver on time.

Inflationary pressures remained relatively muted. Input costs increased slightly faster than in August, but still represented the second-slowest pace since the end of 2022. Companies reported higher prices for maintenance, spare parts, stationery, transportation, utilities, and slight increases in staff costs.

Output prices rose for the seventh consecutive month as businesses sought to protect profit margins, though the inflation rate remained slight.

Despite the slowdown, business confidence strengthened from August levels. Companies expressed optimism about future output growth, citing competitive pricing, new product development, good customer service, and increased product awareness through advertising and customer recommendations.

"Firms remain confident that their pipeline of work will be sufficient to keep output rising over the coming year," Harker added. "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."

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