Qatar’s non-energy private sector records renewed business expansion and booming labour market in October: QFC PMI
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QFCA CEO Yousuf Mohamed al-Jaida.
The 12-month outlook remained stronger than the long-run survey trend, according to the QFC’s purchasing managers’ index (PMI), a composite single-figure indicator of non-energy private sector performance derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.
Demand for goods and services increased at a faster rate, leading to growth in total activity and the greatest build-up of outstanding business in over two years, it said.
“The headline PMI rose to 52.8 in October, taking it above the average for the third quarter (52.0) and signalling renewed momentum in the non-energy sector. New business growth accelerated, driving total activity higher and leading to a faster build-up in outstanding work,” QFC Authority Chief Executive Officer Yousuf Mohamed al-Jaida said.
The Qatar PMI indices are compiled from survey responses from a panel of around 450 private sector companies from the manufacturing, construction, wholesale, retail, and services sectors, reflecting the structure of the non-energy economy according to official national accounts data.
The rise in the PMI since September mainly reflected a faster increase in new business, which in turn generated a renewed expansion in overall business activity. Inflows of new business expanded for the 10th month running, linked to successful marketing, service enhancements, population growth and client satisfaction. Outstanding business increased for the second month running and at the fastest rate since June 2022.
October data signalled continued investment in staff in order to boost capacity. Over the past two months non-energy employment has risen more quickly than at any other time in the survey history. Service providers in particular raised staffing levels at a rapid rate.
“A key theme of recent months has been the booming labour market, and this continued at the start of the fourth quarter. The employment and staff costs sub-indices remained close to September’s record highs as firms reported hiking salaries to boost capacity and retain skilled and experienced staff. However, higher staff costs have not been passed on to customers as prices charged fell further in October,” al-Jaida said.
Wage inflation in the non-energy sector remained close to September’s record level in October. The seasonally adjusted Staff Costs Index was the second highest on record. Companies reported boosting salaries to retain experienced and skilled staff in a highly competitive market.
Overall cost pressures were the highest since July 2020. In contrast, prices charged for goods and services fell for the third month running as firms competed for business.
Confidence regarding the next 12 months remained strong in October, with sentiment the second highest since early-2023, it said, adding positive forecasts were linked to improving market conditions, population growth, real estate investment, new products, marketing and tourism.
Competition among suppliers and good relationships led to another reduction in average lead times in October. Inventory levels rose, leading to a downward adjustment in purchasing activity.
There was a further marked increase demand for Qatari financial services in October, driving a record increase in employment in the sector. The seasonally adjusted Financial Services Employment Index rose to 63.3, from 60.9 in September, the highest since the series began in April 2017. New business (index 60.8) expanded at a relatively strong rate.
Companies were strongly optimistic regarding the 12-month outlook, with sentiment at the second-highest level since early-2023 (69). Total financial services activity increase at a faster rate (57).
In terms of prices, average charges set by financial services companies fell for the third month running. Meanwhile, average input prices rose the most since July 2020.
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