Qatar's non-energy private sector signals strongest improvement since September 2023

The upturn in Doha's non-energy private sector gained notable momentum this May with output and new orders increasing at the fastest rates since the third quarter of 2023, according to the Qatar Financial Centre's purchasing managers index (PMI).

The latest PMI survey data from the QFC compiled by S&P Global found companies continued to expand employment and the 12-month outlook improved. Inflationary pressures remained muted, with input prices broadly unchanged and output charges up only modestly since April, it said.

All four broad sectors posted quicker expansions, led again by wholesale and retail and services. Although new business growth strengthened, companies were still able to reduce the volume of outstanding work during the month.

"The May results clearly indicate that the non-energy private sector has moved up a gear as we approach the halfway point of 2024," said Yousuf Mohamed al-Jaida, QFC Authority chief executive officer.

The Qatar PMI indices are compiled from survey responses from a panel of around 450 private sector companies, which span manufacturing, construction, wholesale, retail, and services sectors and reflect the structure of the non-energy economy according to official national accounts data.

The headline PMI is a composite single-figure indicator of non-energy private sector performance. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.

The PMI registered 53.6 in May, up from 52 in April, rising further above the no-change mark of 50 and signalling the strongest improvement in business conditions in the non-energy private sector economy since last September.

It was also above the long-run trend level of 52.3 (since April 2017). The 1.6-point increase in the PMI was among the largest registered over the past two years.

The latest data signalled growing demand momentum in the non-energy economy. The level of incoming new work expanded at the sharpest rate in eight months, and faster than the long-run survey trend.

Companies often mentioned that their reputations for high-quality products and services had attracted new clients.

The accelerated increase in new business wins in May generated the fastest growth in total business activity since last August.

Highlighting the strengthened confidence in the next 12 months, it said increasing optimism among non-energy private sector companies was linked to development plans and marketing campaigns, plus the introduction of new high-quality products and services.

Faster growth of output and new orders was reflected in another increase in employment, it said, adding hiring activity was linked to company development goals, including efforts to speed up the delivery of high-quality services and to gain staff experienced in new technologies.

Demand for inputs rose in May, as purchasing activity increased at the second-fastest rate in ten months.

Lead times continued to improve, however, as firms reported building supplier relationships. Input stocks fell for the fifth time in six months as output growth accelerated.

Cost pressures were broadly stable as average purchase prices declined, offsetting higher wages. Prices charged for goods and services increased for the second time in the past seven months, but at a slower rate than the previous hike in March.

Qatari financial services companies recorded much faster growth in volumes of total business activity and new contracts in May.

The seasonally adjusted Financial Services Business Activity and New Business Indexes rose to 12- and eight-month highs of 60.9 and 59.1, respectively, well above the equivalent indices for the non-energy private sector as a whole.

Companies were increasingly optimistic regarding the 12-month outlook, with confidence the highest since last July 2023. Meanwhile, employment growth was maintained for the 14th successive month.