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The main Purchasing Managers’ Index issued by the Standard & Poor’s Bank of Lebanon and Overseas recorded a significant increase in December 2024, recording 48.8 points, which reflects a clear improvement in the Lebanese economic conditions after a decline in production indicators, new orders, and orders. Export in the previous month.

Lebanese companies also witnessed a significant improvement in levels of confidence in the future of business to record levels after the ceasefire between Israel and Hezbollah.

The index’s sub-indices showed a significant increase during the last month of the year, especially in the future production index. The companies participating in the survey provided the most positive expectations in the history of the survey regarding commercial activity, indicating a recovery in commercial activity during the next twelve months supported by the ceasefire.

At the same time, the survey showed a decrease in contraction rates in production indicators, new orders, and new export orders, which reflects a partial improvement in some sub-sectors of the Lebanese economy. The employment index was generally stable, and inventory levels did not record any noticeable changes.

The Purchasing Managers’ Index rose for the second month in a row from 48.1 points in November 2024 to an eight-month high of 48.8 points in December 2024. This reading represented a recovery in the index reading from its lowest level in forty-four months in October. ) 2024, and indicated the lowest deterioration in the economic activity of Lebanese private sector companies since April 2024.

Survey data indicated a decline in the level of commercial activity in Lebanese private sector companies, although the rate of decline fell to its lowest level since March 2024. In line with this, the total new orders recorded the lowest decline in nine months in the last month of the year. In both cases, the readings of these two indicators are higher than they were in October of last year, after the escalation of the war between Hezbollah and Israel.

The rate of decline in new export orders fell sharply during the latest survey period, and the rate of contraction was the lowest in ten months. This indicated a significant decline in the rate of contraction of business received from international clients.

In light of indications of a recovery in sales conditions, Lebanese private sector companies reduced their purchasing activities slightly in December. In fact, there was no change in input stocks, indicating stable inventory levels. Anecdotal evidence indicated that some companies optimized their inventory to meet high demand.

Employment conditions in Lebanon witnessed stability during the last survey period, as no change was recorded in the number of employees of Lebanese private sector companies in December. In contrast, employee costs borne by Lebanese companies remained stable. However, recent data indicated that the pressure on costs was due to higher purchasing prices. Committee members pointed to the increase in suppliers’ fees. However, the rate of rise in input prices was the lowest in three months.

Lebanese private sector companies raised the prices of their goods and services in an effort to pass on the burden of high operating expenses to their customers. In line with the trend in input prices, the rate of input price inflation fell to its lowest level in three months.

Commenting on the PMI results, Helmy Murad, research analyst at BLOM Bank, said: “It is interesting that the companies participating in the survey presented positive expectations regarding business activity during the next twelve months, as the Future Production Index recorded the highest reading at 61.8. a point. The companies linked positive expectations to the ceasefire agreement between Hezbollah and Israel, while hopes were that the presidential elections scheduled for January 9, 2025, would result in the selection of a new president, one of the factors that contributed to presenting the positive expectations.

He added: “We hope that this will be followed by the formation of a new government to implement the necessary reforms to attract more local and foreign investments. It is also encouraging that the latest World Bank report revealed that the losses in economic activity due to the war in Lebanon, which amounted to $4.2 billion, were lower than the losses previously expected.