Santhosh V. Perumal

Improved sentiments in output, new businesses and jobs have signalled returning of growth momentum in Doha's non-energy private sector at the end of the third quarter (Q3), according to Qatar Financial Center (QFC).

All primary indicators for output, new business and jobs improved in unison for the second month running, with each posting bigger monthly gains than in August, QFC's PMI (Purchasing Managers’ Index) for September said.

Meanwhile, the future activity index was the second-highest on record, below only the level achieved in December 2018.

The headline PMI, which hit a six-month high, is a weighted average of five indices for new orders (30% weight), output (25%), employment (20%), suppliers’ delivery times (15%, with the index inverted) and stocks of purchases (10%), and is designed to provide a timely single-figure snapshot of the health of the economy every month.

"The PMI signalled returning growth momentum in Qatar’s non-energy economy in September," said Sheikha Alanoud bint Hamad al-Thani, executive director (Business Development), QFC Authority.

The Qatar PMI rose sharply to 49 in September from 46.4 in August. The index has risen by 3.8 points since July – the largest sustained improvement since that recorded in September-October 2017 when the initial effects of the blockade had subsided.

Output has the second-highest weight in the PMI calculation and provided the biggest boost, increasing the headline figure by 0.9 index points. Positive contributions also came from new business (+0.7), employment (+0.7) and stocks of purchases (+0.4), while suppliers’ delivery times again limited the overall gain in the PMI (-0.1).

New business was heavily linked by firms to new customers and projects, with the forthcoming FIFA World Cup in 2022 often mentioned as a source of demand.

"This trend is expected to continue, with new projects and (2022 FIFA) World Cup-related work underpinning a stronger outlook for activity over the next 12 months," it said.

The future activity index rose sharply to the second-highest on record in September, with more than three-quarters of firms expecting growth.

Firms highlighted new projects and work related to the World Cup as driving new business, and this also underpinned stronger expectations for output over the next 12 months, Sheikha Alanoud said.

Data signalled rising cost pressures in September, with average input prices increasing at the strongest rate in five months.

"This mainly reflected labour costs. In contrast, prices charged for goods and services continued to fall, albeit only slightly," PMI said.

The Qatar PMI indices are compiled from survey responses from a panel of around 400 private sector companies. The panel covers the manufacturing, construction, wholesale, retail and services sectors, and reflects the structure of the non-energy economy according to official national accounts data.