PMI signals improvement in Egyptian non-oil sector

Cairo / Emirates Business

The Emirates NBD Purchasing Managers’ Index (PMI) for Egypt, sponsored by Emirates NBD and produced by IHS Markit, contains original data collected from a monthly survey of business conditions in the Egyptian private sector.
Commenting on the Egypt PMI survey, Daniel Richards, MENA Economist at Emirates NBD, says, “The positive PMI reading for the first month of the new fiscal year supports our view that real GDP growth will strengthen in 2018/19 as there is a greater recovery in the private sector, supported by gradual monetary policy normalisation, improved political stability and a rebound in the tourism sector.”
The seasonally adjusted Emirates NBD Egypt Purchasing Managers’ Index (PMI) — a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy — increased from 49.4 in June to 50.3 during July, signalling an improvement in the overall health of the non-oil private sector.
Though indicating only a marginal strengthening in business conditions, the headline figure hit an eight-month high as new orders entered expansion territory.
For the first time in three months, firms operating in the non-oil private sector reported greater volumes of new business amid stronger demand from both domestic and foreign sources. According to panel members, improvements in inbound tourism supported the upturn in domestic new orders, while a strong global economic environment underpinned the expansion in new exports.
Shortages of raw materials and higher costs weighed on business activity, causing output to contract for the third month running. Moreover, staffing levels continued to fall despite the rise in new orders. However, both output and employment fell at marginal and slower rates than in June.
Egyptian non-oil private sector firms continued to lower their purchasing activity, with panel members mentioning a lack of liquidity as a key factor behind
the reduction. Consequently, stocks of purchases declined further in July, though at a softer pace than in the previous month. Alongside the decline in buying levels, stronger demand led firms to utilise stocks.
Expectations towards output growth over the coming 12 months remained positive in July.