Wednesday 20 January 2021

Egypt non-oil sector sees growth in new orders

CAIRO, May 3, 2018

Egypt’s non-oil private sector witnessed a stabilisation in business conditions during April, reflecting output stabilisation and growth of total new orders, said the latest Emirates NBD Egypt PMI survey.

On the price front, input cost inflation eased to the weakest since May 2015, while charge inflation was at a four-month low.
The survey, sponsored by Emirates NBD and produced by IHS Markit, a world leader in critical information and analytics, contains original data collected from a monthly survey of business conditions in the Egyptian private sector.

Daniel Richards, Mena economist at Emirates NBD, said: “The Emirates NBD Purchasing Managers’ Index for Egypt broached the 50.0 level for only the second time in 31 months in April, indicating that the non-oil private sector is finally starting to contribute to the positive growth story underway in the country. We anticipate that the PMI will be more consistently positive over the coming quarters, as ongoing economic reforms and loosening monetary policy encourage greater private sector activity.”    

Key findings

•    Headline PMI registers just above neutral 50.0 threshold
•    Output stabilises during April
•    New orders rise

The headline 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 – rose from 49.2 in March to 50.1 in April. Posting just above the neutral 50.0 threshold, the latest reading indicated a broad stabilisation in operating conditions, following a four-month period of deterioration.

Underlying the upward movement in the headline index was a renewed increase in new orders during April. Anecdotal evidence highlighted an improvement in underlying demand. That said, the rate of growth was slight overall. Meanwhile, new export business increased further, thereby stretching the current period of expansion to four months.

At the same time, business activity stabilised during April, thereby ending a two-month sequence of contraction.

Suppliers’ delivery times lengthened in April, with raw material shortages and greater inflows of new work at vendors reportedly behind the deterioration.

Egyptian non-oil private sector companies faced a further rise in overall input costs during April. The increase was driven by higher purchasing prices and, to a lesser extent, staff costs. Although sharp, the rate of overall input cost inflation eased to the weakest since May 2015 and was below its average.

As has been the case since February 2016, firms raised their selling prices in April. However the rate of inflation eased to the slowest since December 2017 and was modest.

Egyptian non-oil private sector firms continued to signal lower payroll numbers at the start of the second quarter. Where staffing levels decreased, there were reports of staff either retiring or leaving in search of better job opportunities.

Companies raised their input buying for the seventh consecutive month in April. Although modest, the rate of growth quickened to the fastest since January. Meanwhile, input inventories declined for the fifth month in succession in April.

Finally, the level of business sentiment towards the 12-month outlook for output strengthened in April from March’s recent low. Survey respondents expect an improvement in demand conditions, according to anecdotal evidence. – TradeArabia News Service

Tags: Egypt | Emirates NBD | Non-oil private sector |

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