Standard & Poor's: Accelerating indicators of private sector recovery in Kuwait
Ibrahim Mohamed: Kuwait’s non-oil private sector showed accelerating recovery indicators in August 2026, moving noticeably closer to pre-war and regional tension activity levels, driven by strong improvements in new orders, production, and purchases, alongside companies returning to increase headcount for the first time in six months.
Data from the S&P Global Purchasing Managers’ Index (PMI) revealed that Kuwait’s main index rose to 53.6 points in August, up from 50.8 points in July, remaining above the 50-point threshold separating growth from contraction for the second consecutive month. This reflects an acceleration in the pace of recovery for non-oil economic activity.
The August reading gains additional significance as the private sector’s performance approaches levels recorded in February, immediately before the outbreak of war in the region. This suggests that companies are gradually overcoming the repercussions of regional tensions on demand, activity, supply chains, and business confidence.
Strength of Business Activity
The improvement was primarily driven by robust business activity and accelerating inflows of new orders. Both production and new business rose for the second consecutive month, at the strongest pace since February, reinforcing indicators that the non-oil private sector is entering a stronger phase of recovery after the pressures it faced in previous months.
A combination of factors helped companies regain demand, foremost among them competitive pricing, intensified marketing activities, and the provision of high-quality products and services. These factors supported sales and helped institutions expand their customer base.
Export Orders
The improvement was not limited to the domestic market. Companies witnessed a revival in new export orders, benefiting from their ability to secure new sales from clients in several neighboring countries, adding further support to business activity during the month.
This performance reflected in corporate sentiment and expectations for the coming period. Confidence levels regarding activity over the next twelve months improved compared to July, with optimism approaching levels recorded before the escalation of regional tensions. This reflects a relative decline in fears and a renewed bet on continued business growth.
Among the most prominent signs of improvement was the return of employment to growth. Non-oil private sector companies increased their workforce in August for the first time in six months. However, the pace of job creation remained limited compared to the strength of demand growth, leading to a buildup of unfinished work for the second consecutive month.
Companies also moved to intensify the purchase of production inputs to rebuild inventories after a period of decline. Purchases recorded the fastest growth rate since the survey began in September 2018, coinciding with inventory levels reaching the highest reading in the index’s history, indicating companies’ readiness for continued strong demand in the coming period.
Supply chains also showed improvement, with suppliers able to respond faster to companies’ orders, contributing to the shortest delivery times since February.
Cost Challenges Amid Strong Recovery Indicators
Amid strong recovery indicators, cost pressures emerged as one of the most prominent challenges for companies. Inflation in production input prices rose to a six-month high, driven by increases in wages, raw material costs, maintenance, marketing, and utilities. Employment costs also recorded their fastest rate of increase since the beginning of 2026, adding further pressure on companies’ operating expenses.
Facing these rising costs, institutions moved to increase the selling prices of their products and services at a noticeable pace to pass on part of the burden to customers, while other companies chose to offer discounts to maintain sales strength and attract more demand.
