Contraction of private sector economy in Lebanon
The headline index recorded an average of 45.5 over the opening quarter as a whole, which was down on the 47.7 registered in the final three months of 2013.
The PMI is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30%), Output (25%), Employment (20%), Suppliers' Delivery Times (15%) and Stocks of Purchases (10%). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
As has been the theme in recent months, security issues weighed heavily on economic performance during March. Output levels fell and the appetite for new business also waned. Rates of decline in both business activity and new work remained sharp, despite being the slowest in the year thus far. Adding to companies' woes was a further contraction in incoming new orders from abroad, the third in successive months. In line with deteriorating order books, Lebanese firms lowered their employment levels slightly during March.
It was the second consecutive month of net job losses in the private sector economy. Still, staffing capacity was sufficient for further inroads to be made into outstanding business, as has been observed throughout the opening quarter. Purchasing activity among businesses also decreased for a third straight month in March, though to a lesser extent than output, thereby leading to a rise in stocks of purchases.
The average time taken for suppliers to deliver ordered items meanwhile increased slightly, which anecdotal evidence suggested was partly attributable to disruption on transport routes. March's survey showed a fractional decrease in overall average input prices. The reduction was predominantly a reflection of decreased staffing costs, with prices paid for purchased items virtually unchanged on the month.
Output prices in the private sector economy meanwhile decreased for the third month running, though the rate of decline was notably weaker than in February and only modest. ■