Private sector output, jobs creation boost non-hydrocarbons sector, says QFC

Solid output growth in the private sector and job creation as well as falling average cost burden helped Qatar report improvement in business conditions within the non-hydrocarbons sector, according to the Qatar Financial Center (QFC). Price discounting and promotional activity continued to stimulate client demand, which in turn led to higher output requirements across the non-hydrocarbon sector. Furthermore, job creation was the “joint-fastest amid strong business confidence”, said the QFC’s Qatar PMI (Purchasing Managers’ Index).

qfcThe survey, compiled for QFC by IHS Markit, has been conducted since April 2017 and provides an early indication of the operating conditions in Qatar. “Qatar’s non-hydrocarbon sector activity remains positive thanks to continuing expansion in new orders and output growth, according to QFC Qatar PMI a gauge for business conditions. PMI data along with other current performance indicators demonstrates Qatar’s solid economic performance in the first half of the year,” said Sheikha Alanoud bint Hamad al-Thani, managing director (business development), QFC Authority.

The headline seasonally adjusted QFC PMI – a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil and gas private sector – softened to 51.8 in June compared to 52.4 in May. Readings above 50 signal an improvement in business conditions on the previous month, while readings below it show deterioration. “Easing output and new order growth partly contributed to the lower headline PMI figure in June. Nevertheless, the latest figure was indicative of a moderate expansion, and one that was stronger than the survey’s average,” it said.

The volume of new business has increased continuously since October 2017, it said, adding many firms noted that the promotional activity stimulated client demand, reflected by the sharpest reduction in selling prices since the survey began. Responding to improving business conditions, firms increased their payroll numbers for the second month running. Besides, the rate of growth accelerated to a joint-record high, according to the report.

Despite higher workforce numbers, backlogs of work continued to build-up in June, PMI said, adding firms linked rising levels of work outstanding to solid inflows of new business. Highlighting that output growth in the non-hydrocarbon private sector was modest overall and below that seen in the preceding survey period; it said the expansion was in line with the historical average, with the latest improvement extending the current phase of growth to nine months.

Average cost burdens faced by firms fell for the first time in the survey’s history during June. The reduction in operating costs was only marginal overall, however. Amid strong positivity towards future growth prospects, stocks of purchases increased at a survey-record pace as firms prepared for an anticipated upturn in growth. Supplier delivery times improved for the first time since April last year, thereby signalling softening capacity pressures in Qatar’s non-oil and gas private sector in June.

Sources and photo-credits: Gulf Times