Lebanon’s non-oil private sector entered positive territory for the first time since August 2022 and saw its strongest improvement in 10 years.

The BLOM Lebanon PMI said business activity, employment and new orders had increased and input cost inflation had slowed to a 21-month low.

The headline figure of the Purchasing Managers’ Index (PMI) was 50.2 in June, up from 49.4 in May, and above the threshold of 50.0 which indicates improving rather than declining business conditions.

However, the report said that despite broadly positive developments, business confidence fell to a four-month low, with firms reporting concerns towards the outlook due to domestic political and economic uncertainty.

Dr. Ali Bolbol, chief economist, head of research, BLOM Bank, said the Lebanese economy had registered positive growth in 2022 and its momentum is carried over to 2023, with the onset of the tourist summer season

“It is plain to see that the economy is adjusting upwards from its deep lows of the crisis years; but the worry is that these positive, tentative steps are viewed as ‘back to normal’, and consequently obviate the need for vital structural reforms that would underpin genuine, solid, and steady growth.”

A significant contribution to the improving conditions was from new orders, which rose at the second-fastest rate in the survey history during June and to the greatest extent since May 2013.

The improvement in demand reflected greater sales to both domestic and foreign customers, the report said.

Firms recorded an uplift in backlogs of work and the accumulation in unfinished orders was modest but the strongest since May 2013, meaning output levels were raised to match workloads.

The rise in business activity, albeit marginal, was the quickest in just over a decade. Employment also increased as firms raised capacity to accommodate for greater sales.

The overall rate of input price inflation slowed to a 21-month low, reflecting a weaker rise in purchase costs, the report concluded.

imogen.lillywhite@lseg.com

(Editing by Imogen Lillywhite; imogen.lillywhite@lseg.com; editing by Seban Scaria)