Lebanese business conditions deteriorated sharply during November while the outlook was also bleak, according to the purchasing managers’ index (PMI) compiled by IHS Markit.
The degree of pessimism towards the one-year business outlook in November was among the worst since the survey’s inception in May 2013 with many respondents expecting the current economic crisis to continue.
The faster deterioration in business conditions last month was partly driven by a stronger contraction in output as a result of the imposition of general lockdown restrictions to contain the spread of coronavirus.
November data also pointed to a marked drop in new orders received by Lebanese businesses, with survey respondents saying their customers were hesitant to place orders amid the uncertainty surrounding Covid-19.
Amid deteriorating demand conditions, businesses continued to pare back their staff numbers in November, according to IHS Markit. The result extended the current sequence of workforce contraction, which began in September 2019.
It added that the Covid-19 pandemic also caused disruption to suppliers midway through the fourth quarter, with input delivery times continuing to lengthen. That said, the rate at which vendor performance deteriorated eased to the softest for five months and was moderate overall.
Input prices faced by Lebanese businesses rose further in November, extending the current inflation sequence, which began in March 2019. Moreover, the latest increase was the quickest for four months. Overall, costs were driven higher by purchase prices, while staff costs fell at a faster pace.
Commenting on the November data, Dr Fadi Osseiran, general manager of BlomInvest Bank, told Arabian Business: “The PMI score of 42.4 confirms yet again what the Lebanese economy has been going through since at least a year, made worse by the latest Covid-19 lockdown: That is, severe declines in income, production and business expectations. What is truly surprising is how decision makers have allowed the economy to freefall without taking any corrective actions to the contrary, allowing it to adjust itself painfully and irresponsibly. This has hardly happened in any country in the world today.”
Any score below 50 indicates negative growth in an economy.
Foreign sales at Lebanese businesses continued to fall during November, according to the survey, and the rate of contraction accelerated since August.
Lebanese businesses remained severely pessimistic about the 12-month outlook for activity in November, it added.
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