- Qatar’s non-energy private sector reached a two-year high in June, with the Purchasing Managers’ Index (PMI) rising to 55.9, indicating robust business conditions and accelerated growth.
- Employment in Qatar’s non-energy economy continued to rise for the 16th consecutive month, fueled by business expansion and the need for skilled workers.
- Despite rising input costs, companies strategically lowered prices to boost sales, contributing to the sixth decline in prices charged for goods and services in eight months.
- Qatar’s financial services sector also experienced notable growth, with business activity and new contracts reaching their highest levels in 13 and 9 months, respectively, indicating strong sectoral performance and optimism for future growth.
Qatar’s non-energy private sector experienced substantial growth in June, reaching a two-year high, according to the latest Purchasing Managers’ Index (PMI) survey data from the Qatar Financial Centre (QFC), compiled by S&P Global.
The report highlighted a marked increase in output, growing at the fastest rate seen in a year and a half. This surge was driven by an acceleration in new business growth, indicating a robust recovery and expansion within the sector.
PMI Highlights and Economic Indicators
The Qatar PMI indices, derived from survey responses from a panel of approximately 450 private sector companies, encompass the manufacturing, construction, wholesale, retail, and services sectors.
These indices reflect the structure of the non-energy economy based on official national accounts data. The headline PMI, a composite single-figure indicator of non-energy private sector performance, registered 55.9 in June, up from 53.6 in May.
This figure signals the strongest improvement in business conditions since July 2022, surpassing the long-run trend level of 52.3 since April 2017.
Strengthening Demand and Business Activity
June’s data pointed to a notable strengthening in demand within Qatar’s non-energy economy. New work levels increased at the sharpest rate in 13 months, outpacing the long-term survey trend.
Companies reported higher customer numbers, boosted by effective promotional activities and heightened client trust in their products and services.
As a result, total business activity grew at the fastest pace since December 2022, with a notable acceleration in the manufacturing and construction sectors while remaining robust across other sectors.
Employment and Optimism on the Rise
The positive business environment was reflected in sustained employment growth, marking the sixteenth consecutive month of increased hiring.
Companies attributed this to business expansion and the need to recruit highly skilled staff, with wholesalers, retailers, and service providers driving recruitment efforts.
Confidence in the 12-month outlook remained strong, with businesses linking positive forecasts to new branch openings, new customer acquisition, and marketing campaigns.
Increased Purchasing and Improved Supplier Relationships
The report also highlighted a rise in demand for inputs, with purchasing activity increasing for the fourth consecutive month.
Despite this, lead times continued to improve as companies fostered better relationships with suppliers. Input stocks rose for only the second time in seven months, and at the fastest rate in a year, as businesses prepared for anticipated increased workloads.
Inflationary Pressures and Pricing Strategies
Cost pressures in June rose slightly, with average purchase prices and staff costs both increasing marginally.
However, prices charged for goods and services fell for the sixth time in the past eight months, at the second-fastest rate in a year. Companies reported making strategic discounts to enhance competitiveness and attract new customers.
Financial Services Sector Performance
Qatar’s financial services sector also saw a further strengthening in growth of total business activity and new contracts in June.
The seasonally adjusted Financial Services Business Activity and New Business Indexes rose to 13- and nine-month highs of 61.1 and 59.2, respectively, well above their long-run trend levels since 2017.
Companies in this sector exhibited increasing optimism regarding the 12-month outlook, with sentiment reaching its highest point since July 2023. Employment growth in the financial services sector was maintained for the fifteenth consecutive month.
CEO Insights on PMI Performance
Yousuf Mohamed Al Jaida, CEO of QFC Authority, remarked on the findings. He stated that the PMI reached its highest level in almost two years in June.
This increase was driven by faster growth in output and new business, along with a renewed rise in inventories. Firms remained optimistic about the 12-month outlook.
The June figure of 55.9 exceeded all pre-pandemic months in survey history, except for October 2017, which recorded 56.3. Growth has now accelerated five times in the first half of 2024 as the non-energy economy rebounded from a moderation in the second half of 2023.
He further pointed out that the latest results indicate a more broad-based upturn. Manufacturing and construction have caught up with the services, wholesale, and retail sectors.
The acceleration in business expansion has not been accompanied by rising price pressures. On the contrary, companies engaged in discounting in June to further boost sales.
Global Context and Methodology
The Purchasing Managers’ Index (PMI) surveys are now available for over 40 countries and key regions, including the Eurozone.
These surveys are highly regarded by central banks, financial markets, and business decision-makers for providing up-to-date, accurate, and unique monthly indicators of economic trends.
The Qatar Financial Centre PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 450 private sector companies.
The panel is stratified by detailed sector and company workforce size, based on contributions to GDP. The sectors covered by the survey include manufacturing, construction, wholesale, retail, and services.
The latest PMI data reveals a robust and expanding non-oil private sector in Qatar, with significant improvements in business conditions, output, and new orders.
The continued growth in employment and positive outlook for the future indicate a resilient economy. With effective strategies in place to enhance competitiveness and foster strong supplier relationships, Qatar’s non-energy private sector is well-positioned for sustained growth and development.
The insights provided by the PMI surveys offer valuable guidance for businesses and policymakers to navigate the evolving economic landscape and capitalize on emerging opportunities.
