QFC: Non-Energy Private Sector Firms Continue to Grow in First Six Months of 2023

QFC: Non-Energy Private Sector Firms Continue to Grow in First Six Months of 2023 By A Robin - July 04, 2023


The latest Purchasing Managers' Index (PMI ) survey data from Qatar Financial Centre (QFC) indicated sustained growth in the non-energy private sector economy mid-way through 2023. Over the second quarter as a whole the PMI trended at 54.6, the best performance since the third quarter of 2022.

The Qatar PMI indices are compiled from survey responses from a panel of around 450 private sector companies. Growth rates for output, new orders, employment and purchasing were all maintained at solid levels, and the 12-month outlook remained firmly positive. The level of outstanding business was reduced, aided by improving supply chains.

The PMI eased to 53.8 in June, from 55.6 in May, indicating another strong improvement in business conditions. Over the second quarter as a whole the PMI trended at 54.6, the best performance since the third quarter of 2022 (55.3) in the build-up to the FIFA World Cup Qatar 2022 . The latest figure remained well above the long-run trend of 52.3.

The PMI figure was mainly supported by the output and new orders components in June 2023, while employment and stocks of purchases also had positive overall contributions.

New business increased strongly in June 2023. Firms linked rising demand to tourism, competitive pricing, additional marketing initiatives and their good reputation among clients. The rate of expansion moderated since May 2023 but was among the fastest seen over the past year. New business growth in financial services accelerated to a ten-month high.

Total business activity rose further in June 2023. Output has risen every month for more than three years, except for a brief correction in January following the conclusion of the FIFA World Cup Qatar 2022 . The rate of expansion eased since May 2023 but was the second strongest of 2023 so far and well above the six-year survey trend.

The 12-month outlook for the non-energy private sector remained optimistic in June, linked to new projects, company development plans and marketing campaigns. Positive expectations remained broad-based by sector, led by manufacturing and services.

Non-oil private sector employment rose further in June 2023, helping firms to further reduce their levels of outstanding business. Suppliers' delivery times continued to be cut despite another rise in demand for inputs, with vendor performance improving to the greatest degree in 2023 so far.

Cost burdens rose in June 2023, as they have every month in 2023 to date. The rate of inflation remained slightly above the long-run survey trend. In contrast, prices charged, or goods and services fell for the fourth time in six months, and at the fastest rate since February 2022.

Qatar's financial services sector continued to expand markedly mid-way through 2023. Growth in new business strengthened further in June 2023, leading to another rapid rise in total activity. The outlook remained positive, and firms boosted hiring.

New business increased, extending the current growth sequence to over three years. Moreover, the rate of growth in June 2023 was the fastest since August 2022 and well above the long-run trend.

Total financial services activity rose for the twenty-fourth month running and at a relatively strong pace. Meanwhile, expectations for activity remained strong and financial services firms raised employment.

June 2023 data signaled the first cut in prices charged by financial services providers in seven months, which in turn contributed to the increase of business activities.

Commenting on this, Chief Executive Officer, QFC Authority Yousuf Mohamed Al Jaida, said that although the PMI eased to 53.8 in June 2023, the second quarter as whole recorded a stronger performance than the first three months of 2023, at 54.6. Growth rates for output and new business remain high and well above the six-year survey trend. Companies continue to point to tourism as spurring growth, as well as competitive pricing and new marketing campaigns.

Financial services expanded sharply, with its headline indices for activity and new business registering 60.0 and 63.4, respectively. Demand for financial services has accelerated for three straight months as finance remains among the leading sectors, he said, adding that companies continue to face rising costs but were nonetheless able to reduce their own prices charged further to attract new sales and retain high profile customers.

The headline Qatar Financial Centre PMI is a composite single-figure indicator of non-energy private sector performance. It is derived from indicators for new orders, output, employment, suppliers' delivery times and stocks of purchases.

Purchasing Managers' Index (PMI ) surveys are now available for over 40 countries and for key regions including the Eurozone. They are the most closely watched business surveys in the world, favored by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends.


By A Robin - July 04, 2023

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