After holding up for months despite uncertainty and bad news, Lebanon’s PMI index — which measures private sector morale — fell below the 50-point threshold in March, hit by the latest escalation between Hezbollah and Israel amid the wider regional conflict involving the United States and Iran.

The index dropped to 47.4 in March from 51.2 in February. While the decline is clear, it is not dramatic and reflects a slowdown in activity due to the security situation, with some sectors still operating in relatively safe areas. It also ends a seven-month streak above 50, with no guarantee of a quick rebound despite the cease-fire announced Wednesday between Washington and Tehran.

A PMI reading below 50 signals contraction, while above 50 indicates growth. The sharper the change, the stronger the shift in activity.

“Amid a war on its doorstep, Lebanon’s PMI fell to 47.4 in March 2026, its lowest level in 17 months,” said Ali Bolbol, head of economic research at BlomInvest. He noted that the drop closely mirrors levels seen in October 2024, when Israel launched an offensive against Hezbollah following months of border tensions linked to the Gaza war.

“All major sub-indicators declined,” Bolbol added, with exports falling more sharply to 41.8 due to the regional conflict. “The only positive note is that employment and wages have remained stable so far.” He stressed that Lebanon ultimately needs a strong state to ensure stability and control decisions of war and peace.

Production fell from 51.8 to 44.9, in line with new orders, which dropped from 51.7 to 44.9. New export orders declined to 41.8, while expectations for the next 12 months plunged from 42.9 to 25.2.