Tribune News Network
Doha
Qatar’s non-energy private sector witnessed remarkable growth in employment, setting a new record in September, according to the latest Purchasing Managers’ Index (PMI) survey data compiled by the Qatar Financial Centre (QFC) in partnership with S&P Global. The survey, which collected data from 12 to 23 September 2024, indicated a sustained overall improvement in business conditions, driven by increasing demand in the financial services sector and a robust employment surge.
The PMI, a composite index derived from indicators such as new orders, output, employment, suppliers’ delivery times, and stocks of purchases, signaled strong expansion in the non-energy private sector, though the overall index slightly eased to 51.7 in September, down from 53.1 in August. Despite the slight moderation, the continued upward trend in key areas, particularly employment, highlights the resilience of Qatar’s non-energy economy.
September’s PMI data revealed that employment growth in Qatar’s non-energy private sector reached a new peak, with companies expanding their workforce at the fastest rate since the survey began in 2017. This surge in employment was driven by a build-up of outstanding business, which companies sought to address by boosting capacity. Notably, the rate of employment growth in September easily surpassed the previous high set in January 2019, reflecting the increasing demand for labor across various sectors.
The employment component of the PMI contributed the largest positive factor to the headline index, underscoring its critical role in driving overall business activity. The expansion in employment was particularly noteworthy given the challenges posed by global economic conditions, signaling the confidence of Qatari firms in their growth prospects and their commitment to expanding their operations.
With the surge in employment, wage inflation also reached unprecedented levels in September, as companies competed for talent to meet the growing demand. The seasonally adjusted Staff Costs Index rose to 59.4, marking the highest level recorded since the survey’s inception. This sharp increase in wages contributed to an overall rise in input costs, with non-staff cost pressures alsointensifying.
Overall cost pressures in the non-energy private sector were the highest in more than four years, as companies faced rising purchase prices and labor costs. The rate of purchase price inflation in September was the fastest since July 2020, reflecting broader inflationary pressures within the economy. Despite these cost pressures, however, the competitive landscape led to a notable decline in prices charged for goods and services. Companies reduced their prices at the fastest rate since February 2019, as they sought to maintain their competitive edge in a highly dynamic market.
While the overall PMI eased slightly in September, this was largely attributed to a slowdown in the construction sector. Activity in the construction industry softened, reflecting fluctuations in demand and potential delays in ongoing projects. However, other key sectors such as manufacturing, services, and wholesale and retail continued to expand, ensuring sustained growth in the broader non-energy economy.
Sub-sector data revealed that new business growth moderated slightly in September, but confidence regarding the 12-month outlook for the economy remained strong. Businesses were optimistic about the future, with sentiment regarding the next year’s activity rising to the highest level since March 2023. This positive outlook was driven by economic development initiatives, population growth, and increased investment in key sectors, including construction, real estate, and tourism.
One of the standout performers in September was Qatar’s financial services sector, which saw the strongest demand for over two years. The Financial Services New Business Index, a key indicator of demand conditions in the sector, rose to 64.1 in September, up from 62.8 in August. This marked the fastest rate of growth in demand since July 2022, underscoring the increasing importance of financial services in driving the non-energy economy.
Employment growth in the financial services sector was also among the strongest in the survey’s history, reflecting the sector’s need to expand capacity in response to rising demand. The rate of employment growth in financial services was the highest in more than five years, highlighting the sector’s critical role in supporting Qatar’s broader economic ambitions.
In addition to strong demand, financial services companies expressed growing optimism regarding the 12-month outlook. Sentiment in the sector reached its highest level since February 2023, with firms citing economic development initiatives, investment in infrastructure, and a positive business environment as key factors driving their confidence.
The record wage growth observed in September is expected to have a positive impact on consumer demand in the months ahead. Higher wages are likely to boost disposable income, leading to increased spending on goods and services. This, in turn, could further stimulate economic activity across various sectors, particularly retail and services.
Commenting on the latest PMI data, QFC Authority Chief Executive Officer Yousuf Mohamed Al Jaida said, “Although the headline PMI eased in September, the overall survey results show several positive developments for Qatar’s non-energy economy. The record increase in employment during the month demonstrates the continued expansion of capacity across key sectors. Qatar’s financial services sector, in particular, recorded strong growth in September, with rapid improvements in demand conditions and a brightening 12-month outlook.”
Al Jaida also noted that the rise in wages, coupled with strong demand in key sectors such as construction, real estate, and tourism, bodes well for Qatar’s economic outlook. “The 12-month outlook continues to improve, as firms invest in expanding their operations and addressing rising backlogs. This positive sentiment reflects confidence in the future of Qatar’s non-energy economy,” he added.
