Cairo – Mubasher: Egypt’s non-oil private sector extended its downturn pace in September, despite the firms’ optimism towards growth prospects.
The headline seasonally adjusted Emirates NBD Egypt Purchasing Managers’ Index (PMI) at 47.4 in September, the lowest reading in three months, from 48.9 in August, according to a recent survey sponsored by Emirates NBD and produced by IHS Markit on Tuesday.
The figure witnessed a sharp deterioration regarding the condition of the Egyptian non-oil private sector, which led to a clear accelerated shrink in the output of the Egyptian private sector
“Improving export demand had been the one bright spot in the PMI surveys over the last few months, but unfortunately this seems to have reversed in September, with new export orders declining for the first time in six months,” head of MENA research at Emirates NBD Khatija Haque commented on the Egypt PMI survey.
“Both output and total new orders fell at a faster rate in September as domestic demand remained weak. However, businesses were more upbeat about the outlook for the coming year, with expectations for as a more stable currency and lower inflation,” she added.
Many panellists referred the decrease in business activity to weak latent demand, the report added.
New orders shed in September, signalling lower demand for Egyptian output of goods and services.
“The rate of contraction remained moderate overall and slower than its long-run average,” the report noted.
Moreover, inflows of new business from abroad retreated in September to its lowest for the first time since March.
“Many panellists reported that political and economic uncertainty in neighbouring countries hampered foreign demand,” the survey indicated.
The survey further added that vendors have shown their best performance since the survey began in April 2011.
“Excess capacity at suppliers due to a fall in buying levels led to faster delivery times, according to anecdotal evidence,” the survey highlighted.
The report attributed worsening business conditions to the consecutive reductions in new orders and output, in line with the acceleration of job shedding, which was the fastest in eight months.
Furthermore, firms stated that the requirements of lower output led them to reduce payroll numbers.
At the level of price pressures, rates of input cost and output charge inflation eased, rising at the slowest rates in three months. Moderate increases were considered for purchase costs and staff salaries.
Finally, the degree of optimism among the Egyptian non-oil private sector’s firms has improved in September, anticipating currency to settle and economy to see an upturn in performance to bolster output growth over the coming year.
