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Faster deterioration in business conditions during May in Lebanon

Christian Fernsby ▼ | June 7, 2019
At 46.3 in May, the BLOM Lebanon PMI fell from 46.7 in April.
Middle East   The faster deterioration was partly driven by the sharpest fall in output
The latest reading pointed a continued deterioration in Lebanese private sector operating conditions, with the rate of decline accelerating slightly from April.

The faster deterioration was partly driven by the sharpest fall in output at private sector firms for five months.

Survey respondents continued to cite a lack of political and economic stability when explaining the latest contraction.

New orders received by businesses in Lebanon continued to decline in May, extending the current sequence of contraction to six years.

Moreover, the rate of decrease accelerated from April and was historically marked.

Anecdotal evidence suggested that demand conditions remained weak.

Contributing to the further fall in new business was another deterioration in international sales.

Moreover, after the slowest reduction in new export orders for 11 months during April, the pace of contraction accelerated in May.

Firms were again pessimistic towards the business outlook midway through the second quarter.

Moreover, amid expectations for continued instability, confidence levels reached a ten-month low.

There were no panel members anticipating a rise in output over the coming year, compared to 26% predicting a contraction.

Meanwhile, purchasing activity fell for the fortieth month in a row, with the pace of decline accelerating from April.

In fact, input buying by firms in Lebanon's private sector fell at the fastest rate for three months.

Panellists continued to mention softening economic demand.

On the price front, input costs rose for the third month in a row.

The rate of inflation was broadly unchanged from May, remaining slightly slower than the historical average.

According to underlying data, the latest increase in costs burdens was driven by purchase prices.

Firms were unable to pass on higher prices to their clients, instead cutting output charges in an attempt to gain market share.