S&P: Kuwait's Non-Oil Private Sector Continues to Grow

- Business confidence rose to its highest level in seven months

- Successful marketing strategies were a key driver of recent increases

- Accumulating backlogs suggest activity could accelerate further

- Strong non-oil GDP growth expected for the third quarter

- Discounts adopted by some firms capped the rate of selling price increases

- Second consecutive monthly rise in new export orders contributed to overall growth

The Kuwait Purchasing Managers’ Index (PMI), published monthly by S&P Global, showed that Kuwait’s non-oil private sector continued to expand at the end of the third quarter of the year. This growth was driven by marketing efforts and competitive pricing, which helped boost new orders and business activity, while business confidence simultaneously reached its highest level in seven months.

Conversely, input cost inflation (the cost of all goods, services, and resources a company needs to produce or deliver its offerings) accelerated, while output prices (the goods or services a company produces or provides to customers for sale) rose at a slightly slower pace.

The main index recorded 52.4 points in September, remaining above the 50-point threshold that separates expansion from contraction for the third consecutive month, indicating continued improvement in conditions for the non-oil private sector. However, the rate of improvement was slower than in August, when the index stood at 53.6 points.

Survey respondents indicated that successful marketing strategies were a primary factor behind recent increases in new orders and business activity, with competitive pricing also helping to secure new business. Both production and new orders rose for the third consecutive month, albeit at slower rates than in August.

Overall new order growth was further supported by a second consecutive monthly rise in new export orders, with their growth rate accelerating to its highest level in seven months.

Regarding expectations, announcements, price discounts, companies’ plans to expand their product ranges, and hopes that air travel restrictions would not be reimposed helped bolster confidence in business activity over the next 12 months.

Business sentiment improved for the third consecutive month, reaching its highest level since February, just before the outbreak of war in the region.

The desire to meet customer requirements promptly led companies to increase hiring levels and input purchasing activity in September.

The rise in input purchasing activity maintained the rapid pace seen in August, marking the strongest growth since data collection for the series began in September 2018, tying with November 2024. Purchase stocks also rose sharply, at the fastest rate in approximately two years. Alongside growing backlogs, some companies took advantage of favorable offers from suppliers to build up their inventories.

The increase in input purchases coincided with a clear improvement in supplier performance, as delivery times recorded their best improvement since July 2020, with companies reducing their waiting times for inputs.

Meanwhile, the recent increase in hiring was the second within three months, though it remained modest. Some respondents noted that hiring levels remained insufficient, despite recent increases in staff numbers, to prevent further accumulation of backlogs. Backlogs rose for the third consecutive month, although the rate of increase was slightly lower than in the previous month.

Input prices rose sharply in September, marking the fastest pace of increase since February. This included both purchase prices and employee costs, with respondents citing higher costs across a range of items, including advertising, electricity, machinery maintenance, rents, and transportation.

On the other hand, output prices also increased, although the reliance of some companies on price discounts helped curb the rise in selling prices, which slowed slightly by the end of the third quarter.

For his part, Andrew Harker, Director of Economics at S&P Global Market Intelligence, said: “Kuwaiti companies’ confidence in the sustainability of the recovery in business activity is growing, with another month of growth recorded in September. Based on the historical relationship between the Purchasing Managers’ Index and official data, strong growth in non-oil GDP is expected in the third quarter.”

He added: “Although expansion was strong in September, the buildup of backlogs suggests that activity could accelerate further if companies are able to expand their production capacities, particularly through hiring. Therefore, job growth trends will be worth watching in the coming months.”

The Kuwait Purchasing Managers’ Index is compiled by S&P Global, based on responses to surveys sent to purchasing managers in a sample of approximately 350 private-sector companies. The sample is classified by retail sector and company workforce size, based on their contributions to GDP. Data collection began in September 2018.