Qatar's non-energy private sector contracted for a fifth consecutive month in April, though the pace of decline eased sharply from March's record lows as firms grew less pessimistic about the year ahead, S&P Global reported on May 5.

The S&P Global Qatar Purchasing Managers' Index (PMI) climbed to 46.4 from 38.7 in March, the eighth-lowest reading since the survey began in April 2017. The index remained below the 50.0 mark separating expansion from contraction, signalling further deterioration in operating conditions but to a much softer degree.

New orders fell again in April after dropping at a survey-record pace in March. The rate of decline slowed notably but remained among the fastest in the survey's history, with companies linking weaker demand to the regional conflict, market instability and reduced client activity.

Output contracted for a fifth straight month, though the pace eased considerably from March's downturn, which had been the steepest since May 2020. Backlogs of work continued to rise but at the weakest rate in the current 17-month sequence.

Business confidence remained negative on balance, with firms citing market instability, weak investor sentiment and general uncertainty linked to the conflict. Pessimism softened sharply, with 29% of survey respondents reporting negative sentiment in April, down from 70% in March. Some firms cited peace negotiations and a potential resolution to the conflict as reasons for optimism.

Inflationary pressures intensified, with overall price inflation accelerating to a 16-month high and running well above the long-run survey average. Purchase prices and wages both rose at stronger rates, and firms passed on part of the increase by raising selling prices for only the second time in three months.

Purchasing activity declined for a fourth month running, with stocks of inputs contracting at the steepest rate since May 2020. Employment continued to rise, though the pace was the slowest since the current sequence began in August 2024.

"The Qatari non-energy economy continued to face disruption in April, reflecting uncertainty due to the conflict and ongoing regional instabilities. New orders continued to fall sharply, leading to another decline in total business activity and sustained pessimism regarding the next 12 months," said Trevor Balchin, Economics Director at S&P Global Market Intelligence.

"That said, the survey indices for output and new orders rebounded sharply since March, raising hopes of a temporary shock to the economy as opposed to a protracted downturn."