- Qatar’s non-energy sector shows promising growth with the Purchasing Managers’ Index (PMI) rising to 51.0 in February, indicating robust expansion and surpassing January’s performance.
- Accelerated growth across output, new orders, and employment in February underscores positive momentum in Qatar’s non-energy sector, driven by enhanced business expectations and confidence.
- Despite challenges such as reduced purchasing activity and slight increases in input costs, sustained employment growth for the 12th consecutive month reflects resilience and optimism within Qatar’s non-energy business landscape.
The latest data from the Qatar Financial Center (QFC) indicates a significant uptick in activity within Qatar’s non-energy business sector in February, surpassing the previous month’s performance. According to the Purchasing Managers’ Index (PMI), a crucial gauge of economic health, the index rose to 51.0 in February, up from 50.4 in January. This uptick underscores a robust expansion in business conditions, reflecting positively on Qatar’s economic diversification efforts.
The increase in the PMI signals promising growth prospects for Qatar’s non-energy sector, driven by improved business expectations and a rise in employment levels. The upward trajectory in the PMI suggests a strengthening of economic activity beyond the energy sector, indicating a more resilient and diversified economy.
Enhanced business expectations contribute to the positive momentum, as companies anticipate favourable economic conditions and increased demand for goods and services. This optimism is bolstered by Qatar’s ongoing efforts to diversify its economy, reduce reliance on hydrocarbon revenues, and stimulate growth in non-energy sectors.
Rapid Growth
In February, Qatar’s non-energy sector experienced accelerated growth across three key components of the index: output, new orders, and employment, all of which registered above 50.0 index readings. This signifies a month-on-month expansion, indicating positive momentum in the sector. Yousuf Mohamed Al-Jaida, CEO of QFC Authority, noted that while new orders did not increase as significantly as in January, the 12-month outlook improved, with firms displaying the highest level of confidence since September of the previous year.
Despite the overall growth, there was a decrease in purchasing activity, suggesting a preference for destocking among businesses. Inventories continued to decline slightly for the third consecutive month, as firms sought to optimize efficiency within Qatar’s non-energy business sector. This trend reflects a strategic approach to managing resources and maximizing productivity.
Moreover, price pressures remained subdued during the period, with average input costs experiencing only a slight increase. Notably, charges decreased at the most significant rate observed in two years. This indicates that businesses are facing minimal inflationary pressures, which could positively impact consumer spending and overall economic stability.
Overall, the data points to a robust performance in Qatar’s non-energy sector, supported by strong output, new orders, and employment figures. The increase in confidence among firms bodes well for future growth prospects, while the strategic management of inventories and subdued price pressures highlight the sector’s resilience and adaptability in the face of challenges.
Increasing Demand
In February, there was a notable rise in demand for goods and services in Qatar’s non-energy sector. Companies attributed this increase to acquiring new customers and the opening of new branches. While the rate of growth slightly decreased compared to January, it led to a reduction in the volume of outstanding business. Despite this, total activity in Qatar’s non-energy sector saw its fastest growth rate in three months during February, although it remained below the strong average observed in 2023.
Against this backdrop, companies expressed growing optimism regarding future growth prospects. They cited several factors contributing to this optimism, including robust business development plans, expansion of client bases, and strategic marketing initiatives. These factors collectively indicated a positive outlook for the non-energy sector in Qatar.
The rise in demand for goods and services was fueled by companies’ efforts to attract new customers and expand their presence through branch openings. This expansion in customer base and geographical reach contributed to an overall increase in business activity.
While the rate of growth in February was slightly lower than in January, it still led to a reduction in the volume of outstanding business. This suggests that companies were able to manage their workload more efficiently, possibly as a result of streamlining processes or increasing productivity.
Growth in Employment
Employment in Qatar’s non-energy sector experienced a notable increase, marking the 12th consecutive month of growth. According to Al-Jaida, companies are expanding their workforce at the fastest pace seen in five months, with the financial services sector leading the way in terms of job creation. Additionally, the financial services sector has exhibited accelerated growth in new business ventures during February, defying the broader trend observed in other sectors.
However, there has been a notable decline in the purchases of inputs, as firms continue to reduce their inventories. This reduction in inventory levels has helped alleviate pressure on supply chains, resulting in shorter lead times for the 22nd consecutive month. Despite this, average input prices have risen in February, primarily driven by increases in wages and purchase costs. However, the overall impact of these cost increases has been relatively subdued.
On the other hand, output prices have experienced a downward trend for the fourth consecutive month, marking the most significant decline since February 2022. This decrease in output prices suggests that firms may be facing challenges in passing on increased input costs to consumers.
While there has been sustained growth in employment within Qatar’s non-energy sector, firms are facing contrasting trends in input and output prices. While input prices have risen due to factors such as increased wages and purchase costs, firms are finding it challenging to pass on these costs to consumers, leading to a decline in output prices. Despite these challenges, the overall outlook for employment remains positive, indicating resilience and growth within the sector.
