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Kuwait’s business confidence soars in non-oil sector: S&P
PMI shows rise in job creation amid signs of inflationary pressures

KUWAIT: Business confidence in Kuwait’s non-oil sector reached record-high levels in March with a notable expansion in output and new orders, according to S&P Global Kuwait Purchasing Managers’ Index (PMI). The inaugural S&P Global Kuwait Purchasing Managers’ Index (PMI) paints a promising picture for the nation’s non-oil private sector, indicating a significant strengthening of growth momentum in March.

The index revealed a marginal increase in job creation and signs of increased inflationary pressures. Kuwait recorded the sharpest increase in staff costs on record and the sharpest rise in selling prices for almost two-and-a-half years. Kuwait’s PMI increased from 52.7 in February to 53.2 in March, reflecting the most prominent improvement in business conditions since July 2020.

Advertising efforts and competitive pricing strategies played pivotal roles in driving further increases in both business activity and new orders in Kuwait’s non-oil sector in March.

The rates of expansion in these areas were the fastest since July 2020, underscoring the robust growth momentum. “Kuwaiti non-oil firms are in a strong growth phase at present, with competitive pricing really paying off and attracting customers in increasing numbers,” stated Andrew Harker, economics director at S&P Global Market Intelligence.

Despite strong growth in new orders, employment levels in Kuwait’s non-oil sector saw only fractional increases, resulting in the accumulation of outstanding business for the 14th consecutive month. Efforts to meet customer demands led to marked increases in purchasing activity and stocks of inputs, supporting continued growth. Meanwhile, suppliers’ delivery times continued to decline, albeit to the least extent since July 2022.

“If new orders continue to flow in as they have been doing, firms will likely need to take on additional staff to prevent delays in the completion of projects,” added Harker.

Inflationary pressures were notable in March, with the steepest increase in staff costs on record and the sharpest rise in selling prices in almost two-and-a-half years in Kuwait’s non-oil sector. Rapid increases in purchase prices, particularly in computers and printing-related costs, contributed to heightened inflation concerns.

Despite inflationary pressures, business confidence strengthened in March, with around one-third of respondents expressing optimism about future activity over the next 12 months. Moreover, the offer of quality products at competitive prices is expected to sustain output growth in the coming year.

The new Kuwait PMI provides a leading indicator with which policymakers, investors and businesses can gauge the health of the Kuwaiti business environment outside of the oil sector. The Kuwait survey data have been collected monthly since 2018, allowing the current business situation to be analyzed in the context of recent historical trends, including over the COVID-19 pandemic.

Based on survey responses from approximately 350 private sector companies, the Index covers contributions to non-oil GDP across manufacturing, construction, wholesale, retail and services sectors.

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