Qatar’s non-oil private sector witnessed stronger growth in October as business conditions improved and demand for goods and services increased. Better overall conditions led to growth in total activity and the greatest build-up of outstanding business in over two years.
The 12-month outlook for non-oil sector activity in Qatar remained stronger than the long-run survey trend. Companies continued to invest in staff by increasing both employment and wages at rates close to September’s respective series records. Overall cost inflation was the highest in over four years, but competitive pressures led to another fall in prices charged.
The latest Purchasing Managers’ Index (PMI) survey data from Qatar Financial Center (QFC) compiled by S&P Global signaled stronger growth in business conditions in Qatar’s non-energy private sector in October. The PMI rose to 52.8 in October, from 51.7 in September. This rise in the headline figure in October took the index back above the long-run survey average of 52.3.
New business grows
The rise in Qatar’s PMI since September mainly reflected a faster increase in new business last month, which in turn generated a renewed expansion in overall business activity. Inflows of new business expanded for the 10th consecutive month while outstanding business increased for the second month straight and at the fastest rate since June 2022.
October data signaled continued investment in staff to boost capacity. Over the past two months, Qatar’s non-oil sector 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 labor 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,” stated Yousuf Mohamed Al-Jaida, CEO of QFC Authority.
Wage inflation remains near all-time high
Wage inflation across Qatar’s non-oil sector remained close to September’s record level. The seasonally adjusted Staff Costs Index was also the second highest on record. Companies reported boosting salaries to retain experienced and skilled staff in a highly competitive market.
In addition, 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.
“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,” added Al-Jaida.
Read | UAE non-oil business activity rises in October on higher sales, lower prices: PMI
Future outlook
Confidence regarding the next 12 months remained strong in October, with sentiment across Qatar’s non-oil sector recording the second-highest level since early 2023. The report attributed the positive forecasts to improving market conditions, population growth, real estate investment, new products, marketing, and tourism. Competition among suppliers and good relationships led to another decline in average lead times in October. Inventory levels rose, leading to a downward adjustment in purchasing activity.
For more economy news, click here.
