Employment Growth Hits a Series Record as Non-energy Economy Improves. Qatar non-energy private sector is experiencing a steady upswing, as indicated by the latest Purchasing Managers Index (PMI) data for September. Compiled by Qatar Financial Centre (QFC) and S&P Global, this data presents a clear picture of the positive developments taking place within the country’s private sector, especially outside the energy industry.
With a 12-month outlook reaching its strongest point since March 2023, the demand for goods and services has continued to grow, helping Qatar remain resilient despite global economic challenges.
Strength in Demand Drives Growth
The PMI data highlights that demand for goods and services has continued to rise, fueling business activities and creating a surge in outstanding business. This increase in demand has encouraged companies to take on more tasks, resulting in a buildup of backlogged work. To meet these demands and reduce backlogs, businesses have responded by significantly expanding their workforce. The PMI survey data reveals that employment in September saw the fastest growth rate on record, demonstrating the capacity-building efforts across various sectors.
Moreover, this increase in employment has also led to a spike in wage inflation, as companies are offering more competitive salaries to attract talent and expand their operations. The overall cost pressures in Qatar’s non-energy sector reached their highest level in over four years, but despite the increase in costs, prices for goods and services dropped sharply. This counterintuitive trend suggests that businesses are absorbing some of the higher costs while maintaining competitive pricing to boost consumer demand.
Non-Energy Sectors Leading the Charge
While there was a slight pause in overall output growth in September, Yousuf Mohamed Al Jaida, Chief Executive Officer of the QFC Authority, pointed out that this pause was largely concentrated in the construction sector. In contrast, growth in sectors such as manufacturing, services, finance, wholesale, and retail continued unabated. The resilience of these sectors underscores the diversified nature of Qatar’s economy, with non-energy sectors leading the charge.
One of the standout sectors is Qatar financial services, which experienced its fastest growth since August 2022. This sector is seeing rapid improvements in demand conditions, driven by both domestic and international factors. As businesses and consumers alike regain confidence in the economy, financial services are benefiting from increased demand for investments, loans, and other services. Al Jaida emphasized that investment in key areas such as construction, real estate, and tourism is further driving this growth, contributing to a more balanced and sustainable economic recovery.
Employment and Wage Inflation| A Record-Setting Month
September was a historic month for employment in Qatar’s non-energy sectors. The PMI data recorded a series-record increase in employment, as businesses raced to expand their capacity and address rising backlogs. The influx of new jobs also coincided with a significant rise in wage inflation, marking the highest levels of wage growth in recent years. This wage growth is expected to have a positive ripple effect across the economy, as increased consumer spending is likely to follow.
While the rise in wages is a positive development for workers, businesses are facing increased cost pressures. According to the PMI survey, the overall cost burden on businesses rose to its highest level in over four years. However, many companies have opted not to pass these higher costs onto consumers, resulting in a sharp decrease in charges for goods and services. This strategic move by businesses to absorb costs could help stimulate consumer demand, further supporting economic growth.
A Brightening 12-Month Outlook
Looking ahead, the 12-month outlook for Qatar’s non-energy private sector is brighter than it has been since March 2023. Businesses remain optimistic about the future, with many citing planned investments in key sectors like real estate, tourism, and construction as reasons for their positive outlook. The anticipation of growth in these sectors is further bolstered by the continued expansion of the country’s infrastructure and the increasing global attention on Qatar as a business and tourism hub.
The Qatar PMI indices are based on survey responses from around 450 private sector companies, covering sectors like manufacturing, construction, wholesale, retail, and services. This wide-ranging data reflects the structure of Qatar’s non-energy economy, providing a comprehensive look at the current and future health of the country’s business landscape.
Conclusion
PMI survey data for September highlights the sustained growth in Qatar’s non-energy private sector, driven by strong demand for goods and services. The record-breaking increase in employment and wage inflation points to businesses’ confidence in the economy, while the falling prices for goods and services suggest a strategic effort to maintain consumer demand.
With key sectors like financial services and real estate showing strong growth, Qatar’s economic outlook remains promising.