Lebanon’s Purchasing Managers' Index (PMI) dropped further in August, reflecting a growing sense of economic instability as security concerns continue to escalate in the country.

According to a report published by BlomInvest on Wednesday, the PMI slid to 47.9 points, down from 48.3 in July. This index, which measures economic activity, signals a contraction whenever it falls below the 50-point threshold. A decline in the index compared to the previous month indicates an accelerating downturn in economic activity.

The drop in August's PMI coincides with heightened regional tensions following the assassination of Fouad Shukur, a senior Hezbollah officer, by Israeli airstrikes in Beirut’s southern suburbs on July 30. This incident, followed by the killing of Hamas leader Ismail Haniyeh in Tehran the next day, further destabilized the region. Iran and Hezbollah have both vowed retaliation, exacerbating fears of conflict. In response, several embassies advised their citizens to leave Lebanon, and numerous airlines suspended flights to Beirut. The worsening security situation has heavily impacted the tourism industry and deepened concerns about Lebanon’s already fragile economy.

The PMI’s decline is largely attributed to drops in production and new orders. Production levels fell from 47.2 points in July to 46.5 in August, while new orders decreased from 46.9 to 46.1 points over the same period. On a more positive note, export orders experienced a slight uptick, rising from 47.2 points in July to 47.5 in August, though this modest gain did little to offset the broader downturn.