New orders continued to rise significantly at the end of the second quarter, leading to a record increase in employment as firms sought to manage their workloads effectively. Purchasing activity also increased; however, companies continued to report a buildup of work backlogs. The heightened demand for materials and staff resulted in rising input costs, which in turn led to the fastest pace of output price inflation in a year, despite attempts to maintain competitive pricing. The headline S&P Global Kuwait Purchasing Managers’ Index™ (PMI®) is a composite single-figure indicator that reflects the performance of the non-oil private sector. It is derived from various indicators, including new orders, output, employment, suppliers’ delivery times, and stocks of purchases.
The headline PMI fell to 53.1 in June from 53.9 in May, marking the lowest reading in three months but still indicating a solid monthly improvement in Kuwait’s non-oil private sector. Operating conditions have now shown strength for ten consecutive months.
Kuwaiti companies also reported significant increases in both output and new orders in June, although the rates of expansion eased in both areas. Total new business was bolstered by a record surge in new export orders. Anecdotal evidence suggested that competitive pricing and effective advertising were the primary drivers of growth in new orders and business activity.
To manage rising workloads, companies expanded their staffing levels, purchasing activity, and inventory holdings in June. The latest increase in workforce numbers represented the sharpest rise since the survey began in September 2018, although it remained modest overall. Consequently, staff costs also grew at the fastest pace on record.
Positive outlook for Kuwaiti labor market
Meanwhile, the growth rate in purchasing activity accelerated sharply, reaching its highest level since November of last year, which was also true for stocks of purchases.
Andrew Harker, economics director at S&P Global Market Intelligence, stated, “Sustained rises in workloads and increasing confidence for the year ahead have been good news for the Kuwaiti labour market, with companies looking to take on additional staff to keep on top of orders. That said, even a series record rise in employment in June wasn’t enough to prevent a further build-up of outstanding business, suggesting further capacity enhancements may be needed 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.”
Work backlogs increase for ninth consecutive month
Despite these efforts to manage workloads and respond to client requests promptly, backlogs of work increased for the ninth consecutive month in June, with the rate of accumulation quickening to the most significant level in a year. In addition to reporting a record increase in staff costs, purchase prices also rose in June, with the pace of inflation sharp but easing to a three-month low. Respondents noted increases in costs for various inputs, including machinery maintenance, marketing, and stationery.
The rise in input costs led companies to increase their selling prices for the fourth consecutive month. Although competitive pricing efforts resulted in a modest increase, the pace of inflation quickened to a one-year high. Meanwhile, suppliers’ delivery times shortened markedly again, with the latest improvement in vendor performance being the most pronounced since May 2023. Competition among suppliers was identified as a key factor in the latest shortening of lead times by respondents.
Price discounting and enhanced marketing strategies are anticipated to further drive non-oil business activity over the next 12 months. Business confidence strengthened for the second consecutive month, reaching its highest level since May 2024.
