The latest Qatar Financial Centre Purchasing Managers’ Index (PMI) data compiled by S&P Global confirmed an overall improvement in business activity among non-oil private sector companies in Qatar in August 2024. Demand for goods and services increased, leading to a near-record rise in employment and strong growth in output. Firms continued to reduce backlogs of work, average wages rose at the fastest rate in the survey’s history, overall cost pressures reached a four-year high, and prices for goods and services fell slightly. Finally, business activity expectations for the year ahead improved markedly.
The Qatar PMIs are compiled from survey responses from a panel of around 450 non-energy private sector companies. The panel covers manufacturing, construction, retail and wholesale as well as services, and reflects the structure of the non-energy economy as measured by official national accounts data.
Mr. Yousuf Mohamed Al-Jaida, Chief Executive Officer, Qatar Financial Centre Authority, said: “The PMI resumed its upward trajectory in August, mainly reflecting increased employment and higher incoming new orders. Employment growth was the second fastest in the survey’s history, while demand growth was driven by the trade and services sectors of the non-oil economy.
Financial services companies continued to lead other sectors, recording the fastest rise in new orders in two years.
The rate of output growth remained in line with the survey’s strong long-term trend, while expectations for business activity next year rose to their highest level since March 2023.
In addition to hiring more staff, companies raised wages and salaries in August at the highest rate in the survey’s history. This, combined with strong purchase price inflation, helped push overall input price inflation to a four-year high.”
Employment Index
The Qatar Financial Centre’s headline Purchasing Managers’ Index (PMI) is a single-digit composite index that indicates the performance of non-energy private sector companies in Qatar. The headline PMI for Qatar is calculated on the basis of indices of new orders, output, employment, suppliers’ delivery times and purchase stocks.
The Purchasing Managers’ Index (PMI) rose to 53.1 in August from 51.3 in July, indicating a significant improvement in overall business activity in Qatar’s non-oil private sector. The index reading was above the long-term trend level of 52.3 (since April 2017).
The employment index was a major contributor to the headline PMI, with non-oil private sector jobs rising strongly in August, offsetting a slight decline in July. The growth rate in employment was the second-highest in the survey’s history and just below the record high set in January 2019.
The rise in employment coincided with record wage pressures during the month, with the seasonally adjusted employee cost index hitting a new record of 55.7. Non-employee cost pressures also intensified in August, with purchase price inflation rising to a 15-month high. Input price inflation hit a four-year high. In contrast, prices of goods and services from non-oil private sector companies have recently fallen.
Hiring activity picked up as demand for goods and services from Qatar’s non-oil private sector firms increased. New orders rose for the 18th time in 19 months and at a solid rate that exceeded the survey’s long-run trend.
Total business activity grew strongly in August, supported by a rapid rise in new work. Output has been rising for more than four years, except for a slight dip in January and December last year. While firms signed new contracts, they continued to reduce their backlog of work, albeit at the slowest rate in the current seven-month series of backlog reductions.
Confidence about business activity over the next 12 months improved significantly in August 2024 to its highest level since March 2023. The positive sales outlook is attributed to government economic development policies, tourism, increased numbers of expatriates, construction and real estate projects, and Qatar’s attractiveness to foreign investors.
As new projects began to be implemented, demand for inputs rose in August, with purchasing activity rising for the sixth straight month. However, suppliers’ delivery times improved to the highest level since December 2022. Inventories of inputs fell for the sixth time in 2024 so far and by the highest rate since November 2022.
Fastest rise in new business in two years
Financial services firms in Qatar reported increased demand for their services in August 2024. The seasonally adjusted Financial Services New Business Index rose sharply from 57.2 in July to 62.9 in August, indicating a strong improvement in demand conditions with the fastest growth since August 2022. This led to a significant increase in total business activity (58.6).
Financial services firms gave positive outlooks for the next 12 months as business confidence rose to its highest level since May 2023. Employment growth was at its strongest in five years (at 56.4 points).
In terms of prices, the average fees charged by financial services firms fell for the first time in four months. At the same time, average input prices rose at the highest rate since July 2020.