Doha, Qatar: 5 February 2023 – The first batch of Purchasing Managers’ Index™ (PMI™) survey data from Qatar Financial Centre (QFC) for 2023 indicated a cooling of business activity in January following the conclusion of the FIFA World Cup Qatar 2022™ tournament, but the 12-month business outlook soared to the highest in three years. Data by sector signalled ongoing growth in services, particularly financial services. There was also a relative improvement in the jobs market as the respective employment index posted its largest ever one-month gain to reach a six-month high.
The Qatar PMI indices are compiled from survey responses from a panel of around 450 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.
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.
The PMI posted a correction to 45.7 in January, from 49.6 in December, indicating a moderation in overall business conditions as activity and new work cooled following the FIFA World Cup Qatar 2022™ tournament. The latest reading was the lowest in 31 months but should be viewed in the context of a stellar 2022 calendar year when the PMI trended at 57.7, the highest annual average sine the survey began in April 2017.
Forward-looking data continued to highlight improving prospects for the non-energy private sector in January. The Future Output Index rose for the sixth month running to a three-year high of 74.9, indicating a strong degree of optimism as companies reported new business opportunities arising from the FIFA World Cup Qatar 2022™. Moreover, the month-on-month rise in the Index was the second largest on record. Sentiment improved across all four sub-sectors and was especially strong in manufacturing.
Although overall levels of activity were lower over the month in January, this was the first correction since a run of strong gains in every month during the previous two-and-a-half years. Sector data also signalled resilience at service providers at the start of 2023.
The drop in the headline PMI figure was cushioned by a record one-month rise of 4.1 points in the employment index, the third-largest component with a 20% weight. Overall labour market conditions were the best in six months, and headcounts rose in the services and wholesale & retail sectors.
The start of 2023 saw the rate of completion in outstanding work match the fastest registered over the past three-and-a-half years, following a two-year period of strong backlog growth in the lead-up to the FIFA World Cup Qatar 2022™.
Regarding prices, input costs rose at the fastest rate in seven months in January, whereas output prices were discounted for the first time since last April.
QFC Qatar PMI™ vs. GDP
Strongest outlook for financial services in over three years
The financial services sector in Qatar continued to expand at a marked rate in January and the 12-month outlook strengthened noticeably. Activity increased for the nineteenth successive month, and at a rapid pace, while expectations for activity surged to the highest since August 2019.
New business grew for the thirty-second consecutive month in January, and at the fastest rate since last August. Meanwhile, financial services firms expanded their headcounts at the sharpest rate in 15 months.
January data indicated a jump in costs at financial services providers, with the Input Prices Index rising to a seven-month high and above its long-run average. Charges levied rose for the second month running following a five-month sequence of discounting.
Although January saw moderations in current levels of activity and new business, these should be viewed in the context of a very strong 2022, the best calendar year so far during the survey’s six-year history.
The financial services industry in Qatar is experiencing a significant boost in growth and expansion. Our latest data indicates that activity in the sector has been consistently increasing for the past nineteen months, and the outlook for the next 12 months has been the strongest in over three years. This is reflected in the Financial Services Future Activity Index, which surged to a 41-month high in January, signaling a high demand for financial services in Qatar.
Confidence is also strong outside financial services. The Future Output Index, which tracks non-energy private sector companies’ expectations for business activity over the next 12 months, soared to 74.9, the highest level since January 2020 and above the long-run average of 64.3. Moreover, the monthly gain in the index was the second largest on record.
These positive indicators along with the rise in employment index, reflects a strong degree of optimism as companies reported new business opportunities arising from the FIFA World Cup Qatar 2022™.
Yousuf Mohamed Al-Jaida
Chief Executive Officer, QFC Authority