Kuwait's non-oil private sector strengthens growth at fastest pace in 8 months

Kuwait’s non-oil private sector continued its recovery path in October, with production and new orders accelerating to levels not seen in months, alongside a record surge in purchasing activity and production input inventories, according to data from the S&P Global Purchasing Managers’ Index (PMI).

The main seasonally adjusted index rose to 52.9 points in October, up from 52.4 points in September, surpassing the neutral 50-point mark for the fourth consecutive month. This reading indicates a strong monthly improvement in business conditions within the non-oil private sector.

New order growth hit its highest level in eight months, with expansion continuing for the fourth month in a row. Export orders also accelerated, as participating firms reported receiving new business from clients in neighboring countries. Production growth also sped up compared to September, maintaining its upward trend since returning to growth in July.

Companies cited several factors behind the improvement in demand and production, including the launch of new products, intensified marketing activities, and the adoption of competitive pricing.

In response to rising new orders, companies ramped up purchasing activity in October, with production input purchases and inventory stocks recording their fastest growth rates since data collection began. Some survey participants noted they took advantage of supplier offers to secure materials ahead of expected price increases in the coming months.

On the supply side, conditions improved, with supplier delivery times recording their shortest durations since data tracking began, amid intensifying competition among suppliers and better material availability.

Employment and Costs

In the labor market, employment growth remained limited, although it accelerated slightly compared to September, with the number of employees rising for the third consecutive month. Some companies noted that staff shortages contributed to a backlog of unfinished work, which has increased strongly for the fourth consecutive month, approaching the record level seen in February.

At the same time, inflationary pressures intensified in October, as production input costs rose at the fastest pace since February, driven by price increases for several items, including advertising, machinery maintenance, spare parts, and staff wages. Production prices also rose noticeably, albeit at a slower pace than the record level recorded in September 2021.

Despite rising costs, companies’ expectations for activity over the next twelve months improved for the fourth consecutive month, reaching their highest level since February. Firms attributed this optimism to the expected benefits of intensified marketing activities and competitive pricing policies, which could lead to increased business.

Andrew Harker, Director of Economic Studies at S&P Global Market Intelligence, stated that the recovery in Kuwait’s non-oil private sector strengthened in October, with companies successfully securing new orders and increasing business volumes. He added that firms responded to higher workloads by intensifying purchases and building up inventories, noting that part of this expansion aimed to avoid future price increases amid mounting inflationary pressures.

Harker pointed out that employment remained a area of modest growth, with companies linking delays in project completion to staff shortages. However, he noted that the workforce expanded for the third consecutive month, as firms adopted a slow and steady hiring approach.