S&P: Resumption of air traffic boosted growth of Kuwait's non-oil private sector in July
- Growth trajectory resumes in the third quarter of 2026, driven by rising production and new orders
- Competitive pricing policies attracted additional demand and boosted business activity
- Companies maintained sufficient inventory levels to ensure rapid fulfillment of customer needs
- Some firms increased headcount in response to improving demand
The Kuwait Purchasing Managers’ Index (PMI), published monthly by S&P Global, showed that Kuwait’s non-oil private sector returned to growth in the third quarter of 2026, supported by the resumption of air traffic, which helped boost production and new orders. As business volumes increased, companies expanded their purchasing, while employment levels stabilized. Positive outlooks returned for the first time since the outbreak of the war in the region.
The survey indicated that the S&P Global Kuwait PMI®, a composite index measuring the performance of the non-oil private sector based on new orders, production, employment, supplier delivery times, and purchase inventories, rose to 50.8 points in July, up from 46.4 points in June. This marked the first time in five months that the index surpassed the 50-point threshold separating growth from contraction, reflecting a slight improvement in sector performance at the start of the second half of the year. Despite this improvement, the index remained below its pre-war level recorded in February.
The report noted that production and new orders recorded their first increase in five months in July. The resumption of air flights, following the reopening of airspace after its closure at the onset of the war, contributed to this growth. Competitive pricing policies also helped attract more new orders and stimulate business activity.
Conversely, the survey highlighted that market conditions still face challenges due to the ongoing conflict in the region, which has limited the pace of growth. New export orders continued to decline, partly due to rising shipping costs, although the rate of decline was less severe than in June, marking the slowest drop in five months.
The report showed that increased new orders prompted non-oil companies to boost purchasing activity for the first time since the conflict began, leading to a noticeable rise in inventory levels. Some companies preferred to maintain adequate stockpiles to ensure swift fulfillment of customer orders.
In the labor market, employment levels stabilized in July, ending a four-month streak of job cuts. Some companies increased headcount in response to improving demand, while others deferred hiring due to weak demand in recent months. At the same time, data showed signs of pressure on production capacity, with workloads increasing for the first time in five months.
The survey noted that hiring increases at some companies contributed to a rise in wage costs for the first time since February, albeit at a modest pace. Production input prices also rose strongly, driving up total production costs, fueled by higher prices for construction materials, maintenance, marketing, rent, and transportation.
Survey participants indicated that rising transportation costs were the main factor behind the increase in product and service prices, which continued to rise for the seventeenth consecutive month, though at a slower pace compared to June.
The report noted that the regularity of air travel had effects beyond supporting production and new orders; it also contributed to a return of optimism regarding activity over the next twelve months, for the first time since the outbreak of the war in the region. Companies attributed this positive outlook to their promotional plans and expectations of increased new orders.
For his part, Andrew Harker, Director of Economists at S&P Global Market Intelligence, said that the relative calm witnessed in late June and early July, along with the resumption of air travel, helped drive Kuwait’s non-oil private sector back into growth at the start of the third quarter, while also bolstering renewed optimism about activity prospects.
He added that growth rates and business confidence remain below the levels seen prior to the outbreak of the war, noting that the sustainability of this improvement throughout August will depend on developments in the situation.
