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RIYADH: Business activity across Middle Eastern economies showed mixed trends in June, with Qatar leading growth, Kuwait and the UAE holding steady, and Lebanon remaining in contraction despite easing declines, market trackers showed. 

According to the latest Purchasing Managers’ Index data from S&P Global, Kuwait’s PMI fell to 53.1 in June from 53.9 in May — a three-month low but still well above the neutral 50 mark, signaling a solid improvement in business conditions in the country’s non-oil private sector. 

In the UAE, the PMI ticked up to 53.5 in June from 53.3 in May, while Qatar’s figure for the non-energy private sector rose to 52 in June from 50.8 in May,

Lebanon’s PMI edged up to 49.2 in June from 48.9, remaining below the 50 threshold for a fourth consecutive month.

The broadly positive figures are in line with World Bank forecasts that Gulf Cooperation Council economic growth will accelerate to 3.2 percent in 2025 and 4.5 percent in 2026, driven by the easing of OPEC+ oil cuts and strong non-oil sector expansion. 

Kuwait growing despite slowdown

Kuwait’s PMI rating, which still shows growth despite a deceleration, comes amid expectations of an economic rebound, with the International Monetary Fund and World Bank projecting Kuwait’s real gross domestic product growth at 1.9 percent and 3.3 percent, respectively, for 2025. 

Andrew Harker, economics director at S&P Global Market Intelligence, said: “Sustained rises in workloads and increasing confidence for the year ahead have been good news for the Kuwaiti labor market, with companies looking to take on additional staff to keep on top of orders. 

That said, he noted that even a record increase in employment in June failed to prevent a further buildup of outstanding business, suggesting the need for additional capacity improvements in the months ahead. 

“All in all, the first half of 2025 has been a successful one for Kuwait’s non-oil private sector, and firms go into the second half of the year in good shape to continue expanding,” Harker added. 

UAE PMI edges higher 

Despite the UAE’s PMI figure inching up in June to 53.5 from 53.3 in the previous month, new business growth in the country slowed due to geopolitical tensions, faster output and stable inventories kept overall activity in expansion territory, according to newly released data from S&P Global.

The rise was attributed to firms ramping up efforts to clear backlogs, which boosted output growth and stabilized stock levels after May’s record decline. 

Non-oil private sector firms in the country experienced softer demand toward the end of the second quarter, as heightened regional tensions led to more cautious client spending. 

Geopolitical uncertainty also disrupted supply chains, though input cost pressures eased. 

“The UAE non-oil sector showed signs of a minor setback in June due to the conflict between Israel and Iran. The impact was primarily felt on the demand side, as some businesses reported a slowdown in orders driven by heightened tensions,” said David Owen, senior economist at S&P Global Market Intelligence. 

He explained that this led to a further slowdown in overall new business growth, which fell to its lowest level in almost four years. 

“However, with firms instead able to turn their attention to addressing the substantial level of outstanding work — evidenced since early 2024 — the impact on overall business conditions was negligible,” Owen said. 

The senior economist noted that input costs rose at their slowest pace in nearly two years, allowing businesses to offer price reductions to customers. With consumer inflation remaining subdued, the data suggests a recovery in sales growth is likely in the near future — provided regional tensions ease, he explained. 

Qatar extends expansion 

Qatar’s PMI rise of 1.2 points marked the strongest growth since March and the 18th consecutive month of expansion. The uptick was driven by higher output and employment, though declines in new orders, input stocks, and faster supplier delivery times slightly offset the overall improvement. The reading of 52 remained just below the long-term average of 52.2. 

The latest data signaled a stronger overall improvement in business conditions in Qatar’s non-energy sector at the halfway point of 2025, supported by a sharp rise in employment and renewed growth in activity. 

Employment rose at one of the fastest rates since the survey began eight years ago, partly reflecting efforts to manage a quicker buildup of backlogged work. Output expanded despite a slight decline in new business. 

“Growth remained modest overall, however, as the PMI has not beaten its long-run average of 52.2 so far this year. This can mainly be attributed to intermittent and muted growth of output and new orders, with the non-energy sector not registering concurrent growth in these two indicators since December 2024,” said Trevor Balchin, economics director at S&P Global Market Intelligence. 

“The overall strength of the headline PMI figure continues to be underpinned by rising employment, with companies seemingly undeterred by a lack of sustained demand growth. Ongoing hiring was corroborated by another rise in outstanding business in June, and at the fastest rate since last October,” he added. 

Balchin also noted that wage growth accelerated in June, approaching the record set in January. 

However, overall inflation remained moderate, as purchase price inflation eased to its lowest level in nearly a year, allowing companies to once again reduce the prices of their goods and services. 

Lebanon contracts 

Lebanon’s PMI signaled a slower pace of decline in private sector conditions as employment and inventory levels stabilized. 

S&P data showed that Lebanon’s private sector remained in contraction at the end of the second quarter, though the pace of decline eased compared to May. Output fell more moderately despite weaker sales, while employment and inventory levels held steady. However, heightened regional tensions weighed on business confidence and pushed up purchasing costs. 

“The escalation of the war between Iran and Israel resulted in weaker customer sales and client cancelations, leading to a drop in business activity,” said Fadi Osseiran, general manager of BLOMInvest BANK. 

He noted that purchase prices incurred by companies had surged at the fastest pace in eight months, with these increases being passed on to clients. “What is unfortunate is the sharp drop in the Future Output Index, revealing pessimism at private sector companies regarding future outlook, as 53 percent of respondents expect activity levels to diminish in the upcoming 12 months,” Osseiran said. 

RIYADH: ������Ƶ’s non-oil private sector expanded at its fastest pace in three months in June, supported by rising domestic demand, accelerated hiring, and a pickup in purchasing activity, a survey showed. 

According to Riyad Bank’s Purchasing Managers’ Index compiled by S&P Global, the headline PMI rose to 57.2, up from the 55.8 figure recorded in May, signaling a strong improvement in business conditions and surpassing the long-run average of 56.9.

The index remains well above the neutral 50 mark, indicating sustained expansion across the Kingdom’s non-oil economy. 

The robust growth in ������Ƶ’s non-oil business activity aligns with the broader goals of the Vision 2030 program, which seeks to diversify the Kingdom’s economy and reduce its reliance on oil revenues. 

������Ƶ’s PMI for June outpaced that of its regional peers, with the UAE and Kuwait recording readings of 53.5 and 53.1, respectively. 

Naif Al-Ghaith, chief economist at Riyad Bank, said: “The latest reading reflects a strong improvement in overall business conditions, supported by higher output levels, rising demand, and an active labor market.”  

He added: “Firms largely linked the pickup in activity to improving sales, new project starts, and better demand conditions, although the pace of output growth was softer compared to previous highs.” 

In May, a report released by ������Ƶ’s General Authority for Statistics revealed that the Kingdom’s gross domestic product grew 2.7 percent year on year in the first quarter, driven by strong non-oil activity. 

Commenting on the GDP figures at the time, Minister of Economy and Planning Faisal Al-Ibrahim, who also chairs GASTAT’s board, noted that the contribution of non-oil activities to the Kingdom’s economic output reached 53.2 percent — an increase of 5.7 percent from previous estimates. 

The minister also added that the Kingdom’s economic outlook remains positive, supported by structural reforms and high-quality, state-led projects across various sectors. 

In its latest PMI report, S&P Global stated that non-oil firms in the Kingdom reported a further rise in new orders in June, with the rate of growth continuing to accelerate from its recent low in April. 

Companies that participated in the survey noted that the acquisition of new clients and the benefits of enhanced marketing had improved demand growth across non-oil sectors. 

“New orders continued to lead the expansion, registering the fastest growth in four months and surpassing the long-run trend. Businesses credited this increase to stronger demand, effective marketing strategies, and improved client acquisition,” added Al-Ghaith. 

According to the report, non-oil private companies in ������Ƶ hired staff at the fastest rate since May 2011, as firms expanded teams to manage increased workloads. 

This historically strong increase continued a robust period of job creation seen since the start of 2025, with companies citing high demand for skilled staff as a driving force behind intensified recruitment efforts and increased salary offers. 

Consequently, overall staff costs rose at the fastest pace since the survey began in 2009. 

Purchasing activity accelerated to a two-year high as firms responded to rising input needs, with nearly 40 percent of respondents increasing their purchases. 

Input prices also rose sharply, aligning with the trend observed in the second quarter of the year. This compelled companies to pass on higher costs to customers, although some businesses opted to reduce prices as part of competitive pricing strategies. 

Despite price pressures, non-oil firms in ������Ƶ remained confident of an uplift in activity over the next 12 months, with sentiment ticking up to a two-year high. 

S&P Global stated that this optimism for future growth was largely driven by resilient domestic economic conditions, robust demand, and improving sales pipelines. 

“On the future outlook, sentiment among non-oil businesses remains highly positive. Confidence about future activity climbed to a two-year peak, supported by healthy order pipelines and stronger domestic economic conditions. However, cost pressures became more pronounced in June,” said Al-Ghaith. 

He noted that staff costs had risen at a record pace as firms sought to retain talent, while purchase prices recorded their fastest increase since February, partly due to stronger demand and rising geopolitical risks.

“Despite these cost challenges, firms broadly raised their selling prices, reversing the declines seen in May and signalling an improved ability to pass on higher costs to customers,” said Al-Ghaith. 

The PMI survey data were collected from around 400 private sector companies across the manufacturing, construction, and wholesale sectors, as well as retail and services.