Private sector gradually regains growth trajectory
The Kuwait Purchasing Managers’ Index (PMI), which measures the performance of the non-oil private sector, rose in July 2026, reaching 50.8 points compared to 46.4 points in June, marking its first increase in five months, according to a study released by S&P Global. Surpassing the 50-point threshold, the index signaled a return to growth for the non-oil private sector as the second half of the year began, although it remained below the level recorded immediately before the outbreak of the war in the region in February.
The study showed that the non-oil private sector regained its growth momentum at the start of the third quarter of 2026, driven by the resumption of air travel. This development helped boost production and strengthen new orders after months of decline. Both production and new orders recorded their first increase in five months. Participating companies indicated that offering more competitive prices, alongside the resumption of air travel, contributed to stimulating demand and raising business activity levels in July.
Despite this improvement, the study highlighted that the business environment continues to face challenges due to the ongoing repercussions of the regional conflict, which are limiting the pace of recovery. New export orders continued to decline, affected by rising shipping costs, although the rate of decline was less severe compared to June, marking the slowest drop in the past five months.
The overall improvement in new orders led to increased demand for production inputs, reflected in the return of purchasing activity to growth for the first time since the conflict began. Inventory levels also rose noticeably, as companies preferred to maintain sufficient stock of materials to ensure rapid fulfillment of customer orders.
In the labor market, employment levels remained stable in July, ending a five-month period of workforce reductions. The study noted that some companies hired new workers in response to improved demand, while others chose to maintain current employment levels due to continued weak demand in the recent period. Conversely, signs of increased operational pressures emerged within companies, with the volume of backlogs rising for the first time in five months, reflecting growing pressure on the production capacity of some institutions.
Regarding costs, employee costs rose slightly in July, marking the first increase since February, coinciding with a steady rise in purchase prices. This led to a further increase in total production input costs. Participating companies attributed this rise to higher prices for several inputs, including construction materials, maintenance works, marketing services, rents, and transport, with transport costs considered the most significant factor driving up production costs in the recent period.
At the same time, companies continued to raise prices for their products and services for the seventeenth consecutive month, although the rate of increase was slower compared to the previous month, reflecting a relative decline in the pace of price pressures.
