Qatar PMI Records 47.2 Points in June

Doha, July 21 (QNA) - The most recent PMI survey of Qatar pointed to a stronger 12-month outlook for business activity, which was held back somewhat by a collection of local factors and aggravated by observed seasonal trends. The PMI eased to 47.2 in June, and averaged 48.1 over the second quarter. The quarterly PMI figure can be compared with changes in official gross domestic product (GDP). Since the survey began in April 2017 the PMI has a correlation of 0.88 with the year-on-year percentage change in GDP in real terms, over a comparison period of seven quarters up to the fourth quarter of 2018. The PMI is released ahead of GDP data, and accurately signaled the slower official growth rate of 0.3 percent year-on-year in Q4 2018. So far in 2019, the PMI is signaling a pick-up in GDP growth in the first quarter, to around 0.9 percent, followed by no change in the second quarter. The easing of the PMI in June reflected softer contributions from four of its five components, most notably output and new business. The sole positive contribution came from suppliers' delivery times (although this index fell in June, it is subsequently inverted for the PMI calculation). More positively, the outlook for total business activity strengthened in June as the Future Output Index rose to 80.0. Around 63 percent of survey respondents expect higher workloads at their units over the next 12 months, with confidence strongest in the real estate and business services and construction sectors. June survey data signaled further downward pressure on private sector input costs. Prices paid for raw materials fell the most since the series began in April 2017. Overall input costs fell for the second month running and at a slightly faster rate than in May, also reflecting a stronger decline in staff costs. In contrast to input prices, the index for output charges moved higher in June, suggesting a relative improvement in firms' margins. Charges continued to fall overall, but by the least since February 2018. The Managing Director, Business Development at Qatar Financial Centre (QFC) HE Sheikha Al Anoud bint Hamad Al-Thani said: "The pace of Qatars non-energy private sector expansion has tempered at the midway point of 2019, however it is foreseen to pick up again after the traditionally slow summer season given strong future orders. This follows a rebound in growth in the first quarter according to the PMI, up from 0.3 percent in the final quarter of 2018. "Slower current growth in Qatar partly reflects global headwinds: the global PMI has now eased for four successive quarters up to the first quarter of 2019, and a subdued trend has continued so far in the second quarter. "Looking ahead, the 12-month outlook for business activity strengthened significantly in June. Promisingly, there was also evidence of improving margins for non-energy private sector companies, with a fall in the input prices indicator contrasting with a rise in the output charges index" she added. Qatar Financial Centre (QFC) is an onshore business and financial centre located in Doha, providing an excellent platform for firms to do business in Qatar and the region. The QFC offers its own legal, regulatory, tax and business environment, which allows up to 100 percent foreign ownership, 100 percent repatriation of profits, and charges a competitive rate of 10 percent corporate tax on locally sourced profits. The QFC welcomes a broad range of financial and non-financial services firms. IHS Markit is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the worlds leading financial institutions. 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. The Qatar Financial Centre PMI is compiled by IHS Markit from responses to questionnaires sent to purchasing managers in a panel of around 400 private sector companies. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP. The sectors covered by the survey include manufacturing, construction, wholesale, retail and services. Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of higher responses and half the percentage of 'unchanged' responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted. The headline figure is the Purchasing Managers Index (PMI). The PMI is a weighted average of the following five indices: New Orders (30 percent), Output (25 percent), Employment (20 percent), Suppliers' Delivery Times (15 percent) and Stocks of Purchases (10 percent). For the PMI calculation the Suppliers Delivery Times Index is inverted so that it moves in a comparable direction to the other indices. (QNA)