Lebanon’s private sector activity showed signs of improvement in February, despite the country continuing to grapple with a protracted economic crisis. This recovery, though slow, was driven by an uptick in sales, including a significant increase in export orders, according to the latest results of a private sector survey.

The BLOM Lebanon Purchasing Managers’ Index (PMI), a key indicator of private sector performance, registered 50.5 in February, just a slight dip from January’s 50.6. While this marks the first decline in the PMI after several months of improvement, the index still reflects expansion, as any reading above 50 indicates growth in activity. February's result signals a modest recovery, with signs of resilience in Lebanon’s battered economy.

The report highlighted that the private sector saw improvements in several areas. Notably, purchasing volumes rose, and job opportunities also improved, indicating that businesses were beginning to recover from the severe economic downturn. The PMI for February pointed to one of the most substantial improvements in the private sector's health since the survey’s inception nearly 12 years ago.

Stronger demand conditions were a standout feature of February’s results, according to the report. While the pace of new order growth slowed slightly from January, it continued to expand for the second consecutive month. Of particular note, for the first time since November 2023, private sector firms in Lebanon reported an increase in new export orders, signaling a revival in demand for Lebanese goods abroad.

In addition, the accumulation of outstanding work reached the highest level since the survey began in 2013. Purchasing activity also expanded across the private sector, with the speed of growth marking its fastest pace in over 11 years.

Most notably, private sector firms increased their employment levels for the first time since November 2023, responding to the rising workloads.

The report noted that optimism among Lebanese businesses had been bolstered by the recent election of a new president and the formation of a reform-oriented cabinet. However, political and security challenges remain a concern.

According to Mira Said, Senior Research Analyst at Blominvest Bank, the PMI might have slightly eased due to ongoing tensions with Israel and the presence of Israeli forces in several strategic locations, which continue to threaten Lebanon’s security.

Furthermore, Said pointed to Lebanon’s deep-rooted political and sectarian divisions and widespread corruption as significant obstacles to sustained recovery. Despite these challenges, she emphasized that the newly formed government remained committed to negotiating with the International Monetary Fund (IMF) and implementing crucial reforms to stabilize the economy.

Looking ahead, survey respondents remained generally optimistic about the future. The year-ahead outlook for Lebanon’s private sector suggested continued growth, with businesses expecting further improvements over the next 12 months.

While the private sector shows signs of improvement, Lebanon continues to face a severe economic crisis that has devastated public services and led to widespread job losses. Recent reports indicate that over 875,000 people are displaced internally, and around 166,000 individuals have lost their jobs, resulting in an estimated $168 million in lost earnings.

The housing sector has been particularly hard-hit, with almost 100,000 housing units either partially or fully damaged, leading to losses of $3.2 billion. The country’s ongoing economic and financial crisis, which has now persisted for more than four years, has led to a significant deterioration in public finances, further compounding the challenges faced by Lebanon.

The World Bank has estimated that the total cost of physical damages and economic losses due to the conflict in Lebanon stands at a staggering $8.5 billion. Of this total, $3.4 billion represents damages to physical structures, while economic losses have amounted to $5.1 billion.