Qatar’s non-hydrocarbon private sector businesses foresee strengthened new business volumes in the second quarter of this year, indicating the growing optimism in the future, according to the Qatar Financial Center (QFC).
The overall sentiment regarding future output was the third-strongest since the Purchasing Managers’ Index (PMI) survey began in April 2017, with more than three-quarters of respondents expecting growth at their business units over the next 12 months.
“As a consequence, while the level of the headline PMI figure ebbed slightly from March’s reading, sustained growth in such new work orders supported firms’ robust expectations for future total business activity,” the QFC said.
The headline PMI for Qatar eased slightly to 48.9 in April, from 50.1 in March. Although the most recent reading continues to register above its average over the final quarter of 2018 (48.6), it is just below the trend observed over the first quarter of 2019 (49.7).
The month-on-month dip in the PMI mainly reflects the slower growth rate of new orders and declines in the output as well as employment indicators.
The PMI survey, which is compiled for the QFC by IHS Markit, provides an early indication of operating conditions in Qatar. The PMI readings of above 50 signal an improvement in business conditions on the previous month, while readings below it show a tightening.
“The headline PMI edged lower in April but remains indicative of overall growth in the Qatari economy, and at a faster rate than the mediocre performance seen at the end of 2018,” said Sheikha Alanoud bint Hamad al-Thani, managing director (Business Development), QFC Authority.
Although the PMI does not directly monitor the energy sector, it correlates strongly with total quarterly gross domestic product (GDP) since the survey began in April 2017, and accurately signalled the weak growth in GDP during Q4 of just 0.3% on an annual basis, she said.
With new orders rising at a more balanced pace than in March, firms were able to resume backlog clearance with almost one-third of respondents reporting lower backlogs. Simultaneously, the volume of inputs ordered grew, mainly reflecting the manufacturing sector, while input inventories remained broadly stable, the index said.
Overall cost pressures faced by Qatari non-energy private sector firms eased in April, it said, adding the rate of input price inflation slowed from March’s 12-month high. “This mainly reflected lower staff costs during the month, while raw material prices rose at a slightly weaker rate than in March,” it added.
Although input costs continued to rise, firms cut their own prices for goods and services for the 15th month running in April. The rate of discounting was in line with those seen throughout the first quarter of 2019.
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