S&P: Kuwait's non-oil private sector recovery gains strong momentum in August

Ahmed Maghrabi: The Kuwait Purchasing Managers’ Index (PMI) released by S&P Global showed that the non-oil private sector recovery gained strong momentum in August 2026, with sharp expansions in production and new orders. This prompted companies to resume hiring and increase purchasing activity at the fastest pace since the survey began. Companies also expressed growing confidence in business prospects over the next 12 months, amid rising inflationary pressures and accelerating increases in input costs and selling prices compared to July.

The main PMI, which measures the performance of the non-oil private sector, stood at 53.6 points in August, up from 50.8 points in July, an increase of 2.8 points. This marks the second consecutive month above the 50-point threshold that separates growth from contraction. The report noted that the strong improvement in sector conditions was only slightly below the level recorded in February, just before the outbreak of war in the region.

The report attributed the growth in new orders and business activity to a range of factors, including competitive pricing, marketing activities, and the provision of good-quality products. Production rose for the second consecutive month, recording the fastest growth rate since February, while new orders followed a similar trajectory.

Total new business also benefited from the return of new export orders to growth, as companies reported their ability to secure sales with customers in neighboring countries, signaling an improvement in external demand alongside the recovery in local activity.

Regarding company expectations, the provision of high-quality products at competitive prices boosted confidence in activity for the coming year. Optimism levels rose compared to July, approaching the levels recorded before the outbreak of war in the region.

With increasing workloads, Kuwait’s non-oil private sector companies returned to increasing their workforce in August, recording the first employment growth in six months. However, job creation remained modest and insufficient to absorb the noticeable rise in new orders, leading to a continued accumulation of unfulfilled work.

Backlog of work rose for the second consecutive month, at a faster pace than in July, while companies intensified purchasing activities in an effort to rebuild inventories after a period of decline. Input purchases recorded the second-fastest combined pace since the survey began in September 2018, matching the level seen in November 2024, while purchase inventories rose at the fastest rate since the beginning of 2026.

At the same time, delivery times improved noticeably, as suppliers in many cases responded to faster delivery requests, marking the largest improvement in delivery times since February.

Conversely, the survey showed rising pressures on company costs, with the rate of input cost inflation reaching a six-month high in August. Several companies pointed to rising wages, while labor costs increased at the fastest pace since the start of 2026, alongside higher costs for maintenance, marketing, raw materials, and utilities.

The rise in input costs was reflected in selling prices, which recorded a strong increase, despite some companies reporting that they offered discounts to support sales growth.

Andrew Harker, Economics Director at S&P Global Market Intelligence, said that the recovery of Kuwait’s non-oil private sector “moved to a higher pace” in August, with companies improving their ability to attract new business and increasing production in response.

He noted that the return of employment growth was a positive development, but emphasized the need for further job creation in the coming months if workloads continue to rise.

He added that company confidence in future prospects had risen, although it had not fully returned to pre-war levels, noting that external events could still influence the recovery trajectory. However, the outlook appeared more positive in the middle of the third quarter of the year.

The Kuwait PMI is based on surveys directed at purchasing managers in a sample of approximately 350 private sector companies, distributed across sectors and workforce sizes based on their contribution to GDP. Data collection for the survey began in September 2018. A reading above 50 points indicates an improvement in activity compared to the previous month, while a reading below 50 points reflects a decline.