Doha's non-hydrocarbon private sector witnessed enhanced employment in February this year in view of growing confidence on the business prospects over the 12-month period, according to the Qatar Financial Center (QFC).
“February was another positive month for the Qatari private sector labour market, with employment increasing further on the back of January’s strong recruitment. Sustained workforce growth suggests firms are gearing up for greater workloads in the coming months, which is reflected in the forward-looking business expectations index being at its second-highest level yet recorded," said Sheikha Alanoud bint Hamad al-Thani, managing director (Business Development), QFC Authority.
Highlighting that 71% of survey respondents expect activity to rise over the next 12 months, she said while the underlying trend signifies resurgent growth, particularly compared to the fourth quarter of 2018, February’s PMI (purchasing managers’ index) reading registered a slight dip from January’s six-month high.
Business expectations remained strongly positive in February with the Future Output Index rising sharply to the second-highest level since the survey started in April 2017, below only December 2018 peak. Around 71% of firms are forecasting growth, linked to expected new projects, new clients, new bids being approved and World Cup-related work.
The PMI – which is calculated from five indices for output, new orders, employment, suppliers’ delivery time and stocks of purchases – dipped to 48.5 in February from January's level of 50.5.
This mainly reflected a slower rate of employment growth following January's record gain (accounting for 0.9 points of the two-point drop) and also a slight dip in stocks of purchases (-0.4 points) – again following a record rise in January.
The indicator for short-term output was broadly stable, while new orders (-0.5 points) and suppliers’ delivery times (-0.2 points) had negative contributions to the headline figure (the latter index is inverted for the PMI calculation).
The PMI survey, which is compiled for the QFC by IHS Markit, provides an early indication of operating conditions in Qatar. Readings of above 50 signal an improvement in business conditions on the previous month, while readings below it show a tightening.
"When inferring changes in official economic growth figures, it should be noted that comparisons with official gross domestic product (GDP) data for Qatar suggest that the Qatar PMI needs to fall significantly below 50 for a sustained period before a contraction of the economy is signalled, a relationship also observed in other fast-growing economies such as China and India," Sheikha Alanoud said.
Precise estimates are impeded for Qatar by the short time span of GDP and PMI data currently available for comparison. Since July 2018 the PMI has trended at 49.3, broadly equivalent to 3.7% annual growth in non-mining GDP.
The QFC said the average input prices increased at a faster rate in February, albeit one that remained below the survey average since April 2017. Purchase price inflation remained relatively weak, while staff costs rose at a stronger pace than the series trend.
"Companies continued to cut their own prices charged for goods and services. This, combined with higher staff costs, suggests downward pressure on margins," it added.
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