Qatar’s non-oil private sector hits two-year high in June

(MENAFN- Peninsula) QNA

Doha: Private sector growth in Qatar, excluding energy, accelerated in June, according to the latest data from the Purchasing Managers’ Index (PMI) survey conducted by the Qatar Financial Centre (QFC) and compiled by S&P Global.

Output rose at the fastest pace in a year and a half as new business growth accelerated while firms continued to add staff, with the outlook for the 12 months remaining strong. Inflationary pressures remained subdued, with input prices rising only slightly since May and prices charged for goods and services falling.

The Qatar PMI indices are compiled from survey responses from a panel of around 450 private sector companies. The panel covers manufacturing, construction, wholesale, retail and services sectors and reflects the composition of the non-energy economy as reported in official national accounts data.

The headline Qatar Financial Centre PMI is a composite single-digit indicator of private sector performance outside energy. It is derived from indicators of new orders, production, employment, supplier lead times and purchasing stocks.

The PMI registered 55.9 in June, up from 53.6 in May, and signaled the strongest improvement in business conditions in the private sector economy outside energy since July 2022. It was also above the long-term trend level of 52.3 (since April 2017). The headline figure has risen five-fold so far in 2024, and the 2.3-point rise in the PMI was one of the largest recorded in the past three years.

June data signaled strengthening demand in Qatar’s non-energy economy. New order inflows rose at the fastest rate in 13 months and outpaced the survey’s long-term trend. Firms reported higher customer numbers, promotional activity and customer confidence in their products and services.

Faster growth in new business in June resulted in the strongest increase in overall business activity since December 2022. Growth accelerated particularly in manufacturing and construction, while remaining strong elsewhere. Despite rising demand for goods and services, companies were able to further reduce the backlog of work.

Confidence for the next 12 months remained strong in June, with companies attributing positive forecasts to new branch openings, new customers and marketing campaigns.

Faster growth in production and new orders was reflected in another increase in employment, the 16th in a row. Companies reported new job opportunities due to increased business and the need to recruit highly skilled personnel. Wholesalers and retailers, as well as service providers, drove recruitment.

Demand for consumables rose in June as purchasing activity rose for a fourth straight month. Order lead times continued to improve as supplier relationships continued to develop. Consumables inventories rose for only the second time in seven months and the fastest in a year as companies prepared for anticipated increased new workloads.

Cost pressures increased slightly in June as average purchase prices and employee costs rose, albeit by marginal rates. Prices charged for goods and services fell for the sixth time in the past eight months, however, and the pace of growth was the second-fastest in a year, as companies reported discounting to increase competitiveness and attract new customers.

Qatari financial services firms reported further growth in total business activity and new business in June. The seasonally adjusted financial services business activity and new business indices rose to 13- and 9-month highs of 61.1 and 59.2, respectively, well above their long-term trend levels since 2017.

Businesses were also increasingly optimistic about the outlook for the next 12 months, with sentiment at its highest since July 2023. Meanwhile, job growth continued for a 15th straight month.

On the price front, average fees charged by financial services firms rose the most since April 2023, following a small increase in May and a discount in the first four months of 2024. Meanwhile, average input prices fell slightly for the third time in four months.

QFC Authority CEO Yousuf Mohamed Al Jaida commented: “The Purchasing Managers’ Index (PMI) rose to its highest level in almost two years in June, boosted by faster growth in production and new orders, as well as a renewed rise in inventories, as companies remained optimistic about the outlook for the next 12 months.

Moreover, June’s value of 55.9 was higher than in all pre-pandemic months in the survey’s history except for October 2017 (56.3). Growth has now accelerated five-fold in the first half of 2024 as the non-energy economy rebounded after moderating in the second half of 2023.

“Moreover, the latest results point to a more widespread improvement as manufacturing and construction sectors catch up with services, wholesale and retail.”

“The acceleration in business expansion was not associated with increased price pressure. On the contrary, companies used discounts in June to further increase sales.”

Purchasing Managers’ Index (PMI) surveys are now available for over 40 countries and key regions, including the Eurozone. They are the most closely watched business surveys in the world, favored by central banks, financial markets and business decision makers for their ability to provide timely, accurate and often unique monthly indicators of economic trends.

The Qatar Financial Centre PMI is compiled by S&P Global based on responses to questionnaires sent to purchasing managers in a panel of approximately 450 private sector companies. The panel is stratified by detailed sector and the size of the company’s workforce, based on its contribution to GDP. The sectors covered by the survey include manufacturing, construction, wholesale trade, retail trade and services.

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