Qatar non-oil private sector growth stays upbeat, says QFC PMI

The business conditions in Qatar’s non-oil private sector continue to improve in April this year, according to the country’s first PMI (purchasing managers’ index). The headline seasonally adjusted Qatar Financial Centre (QFC) PMI – a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy – fell to 51 in April, down from 52.5 in March.

Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show deterioration. The survey, compiled for the QFC by IHS Markit, has been conducted since April 2017 and provides an early indication of operating conditions in Qatar. Despite the decline, the reading remained above the critical 50 mark that delineates expansion and contraction, and hinted a further improvement in business conditions, it said, adding growth has been recorded continuously since August last year. Growth was sustained in Qatar’s non-oil private sector in the latest survey, signalled by a positive reading in the headline PMI. The finding reflected further growth in output and new orders.

Qatari firms continue to generate new business at a modest rate, demonstrated by the expansion in new orders since October, according to the PMI

“Although the headline PMI fell slightly in April, the figure was still indicative of an expansion in the non-oil private sector, thus extending the current phase of growth to nine months,” according to Dr Haitham al-Salama, chief economic adviser at the QFC. He said Qatari businesses continued to generate new business at a modest rate, demonstrated by the expansion in new orders since October last year. Although the Future Output Index saw business confidence retrace some of the strong gains witnessed in the last couple of months, it remained positive overall.

The April data also indicated easing levels of job shedding and input price inflation, providing some positive news for the non-oil private sector. The pace of improvement in client demand, captured by new order growth, eased in April leading to a modest softening in output growth. Highlighting that the purchase price inflation softened to an eight-month low, the QFC said whilst some businesses continued to report rising transportation costs, the vast majority signalled unchanged cost burdens since the preceding survey period. Meanwhile, staff costs decreased for the first time in four months.

“Easing price pressures provided welcome signs of lower inflation for local businesses,” al-Salama said. On the employment front, job shedding eased in April and was only fractional overall. Furthermore, the rate of decline was slower than the historical average.

Sources and photo-credits: Gulf Times