Tuesday 19 March 2024
 
»
 
»
Story

Egypt's non-oil sector decline due to subdued demand

Egypt’s non-oil production contracts in July

CAIRO, August 4, 2015

Business activity in Egypt's non-oil private sector shrank in July, with modest declines in output, new orders and employment, a survey showed.

The Emirates NBD Egypt Purchasing Managers' Index (PMI) dipped to 49.2 in July from 50.2 the previous month. A reading above 50 indicates expansion and below 50, contraction.

Jean-Paul Pigat, an economist at Emirates NBD stated that the drop was unexpected and hence raises the possibility that Egypt's macroeconomic recovery may have stalled at the start of FY2015/16.

There was a slight fall in output in July for the first time in three months, which was due to subdued demand, respondents said.

The output was also affected by a shortage in foreign currency, which respondents said, affected their ability to meet supplier cash requirements.

The lack of demand was also reflected in the decline in new export business, which declined for the second time in three months. Respondents blamed this on the lack of stability in major export markets across the Middle East.

Due to lacklustre performance, non-oil private sector employment in Egypt also fell at the fastest rate in three months, although it was still modest.

The depreciation of the Egyptian pound against the U.S. dollar also led to a rise in purchase prices last month, respondents said.

The pound fell to 7.73 pounds to a dollar in July, and while this could boost exports and attract new investment, it also increases the cost of imported raw materials.

This increase in cost was seen in the move by companies to raise prices for the second month in a row, according to some respondents.

President Abdel Fattah Al-Sisi has pledged to reduce joblessness to 10 per cent over the next five years. Unemployment stood at 12.8 per cent during the first three months of 2015 according to the government's statistics agency, but analysts believe actual unemployment may be higher. – Reuters
 




Tags: Egypt | production | Private sector |

More Industry, Logistics & Shipping Stories

calendarCalendar of Events

Ads