Egypt business activity shrinks in March
Cairo, April 3, 2014
Business activity in Egypt slowed marginally in March after stagnating the previous month, according to a poll released on Thursday - a sign the economy remains fragile after years of political and economic turmoil.
The HSBC Egypt Purchasing Managers Index (PMI) for the non-oil private sector stood at 49.8 points in March. That was down from 50 in February.
Readings above 50 indicate expansion; below 50, contraction. The index had been below 50 for 13 months through October.
"Evidence of stabilisation is welcome, but after three years of such heavy economic losses it's not enough,," Simon Williams, the chief Middle East economist at HSBC, said in an accompanying statement.
"The weak readings for output, new orders and employment point to an economy that continues to drift," Williams said. "The continued gains in input costs suggests inflationary pressures will remain high."
The Egyptian economy has been hit by three years of political turmoil since a popular uprising ousted autocrat Hosni Mubarak in 2011. It grew just 1.2 percent in the six months through December, and the government has lowered its growth target for the fiscal year ending in June to a maximum of 2.5 per cent.
Egyptians will vote on May 26-27 in a presidential election that Abdel Fattah al-Sisi is expected to win easily. A former army chief who deposed Islamist President Mohamed Mursi, he could be sworn in as head of state by early June.
Political disorder and militant violence, on the rise since the army's overthrow of Mursi, have further discouraged tourists and investors already unnerved by the 2011 uprising. That has left Egypt largely dependent on Gulf aid.
The PMI survey of around 350 private-sector firms showed a slowdown in output, albeit it continued to rise. The sub-index edged down to 50.3 points in March from 51 points in February.
The index for new orders dropped into contraction territory at 49.5 points, down from 50.2 points in February.
New export orders fell for the second month in a row and at a faster rate, with the sub-index at 48.5 points, compared with February's 48.7.
Businesses cut staff at the slowest rate in 18 months in March, with the employment sub-index rising to 49.7 points from 48.
Output prices fell for the first time in three months, with the index dropping to 49.3 points last month, down from 50.1 points previously. Overall input prices rose to their highest since last July at 62.3 points.
Egypt's urban consumer price inflation hit an annual 9.8 percent in February.-Reuters