Egypt’s non-oil business activity shrinks in September – PMI

Egypt’s non-oil business activity shrinks in September – PMI

Business conditions in the non-oil private sector in Egypt have worsened slightly in September due to lower output and sales.

The seasonally adjusted Emirates NBD Egypt Purchasing Managers’ Index (PMI) inched up to register an above average level of 49.5 in September from 49.4 in August, according to a recent survey sponsored by Emirates NBD and produced by IHS Markit. A reading above 50 indicates expansion, while a reading below that signals contraction.
New orders declined, but output fell at a softened pace than in August.

“The fall in new orders was mainly domestic, with panellists reporting a third consecutive increase in foreign sales, albeit one that was softer than in August,” David Owen, an economist at IHS Markit, noted.

Meanwhile, workforce numbers increased at the quickest pace in 13 months on the back of the “need for additional labour,” and employment costs also grew at the fastest pace since December 2018.

New business orders received by Egyptian non-oil firms dropped for the second month in a row during September.

Prices of fuel, energy, and metals, including raw materials, were remarkably higher during the ninth month of 2019.

Nonetheless, the improved performance of the Egyptian pound against the US dollar relieved inflationary pressures.

“A notable downside was a weakening of sentiment in September, which fell to a near three-year low. Higher prices for fuel and other raw materials dampened some firms’ expectations. Falling sales also harmed the overall outlook,” Owen added.

Outlook for business activity fell noticeably from the 18-month high in August to the lowest level since October 2016.

However, panellists still forecast improvement in business activity over the coming twelve months