Cairo — Mubasher: Egypt’s non-oil private-sector growth contracted in November, but at a slower pace, signaling the softest contraction of business conditions during the recent three-month sequence of deterioration.
The seasonally adjusted Emirates NBD Egypt Purchasing Managers’ Index (PMI) grew to 49.2 in November from 48.6 in October, 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.
“The recovery in the headline PMI in November to a three-month high is encouraging, although the overall survey still points to soft business conditions for the private sector in Egypt,” MENA economist at Emirates NBD Khatija Haque said.
In November, the downturn was led by a further drop in new orders as the companies found that challenging economic conditions continued to take their toll on demand, the survey said.
However, the decline in orders came at a slower pace than in October and only marginal overall.
In the same vein, output eased for the third consecutive month in November but at a weaker pace. New export orders also fell, with the rate of decrease slightly quicker than in October, the survey found.
Despite lowering demand, capacity pressures continued to build, as work backlogs hiked for the fifth consecutive month.
“Some firms highlighted skill shortages, which was captured by the Employment Index dropping to its joint-lowest reading in a year. That said, other respondents actively reduced staff due to falling demand,” the survey added.
Egyptian non-oil private sector companies registered the slowest uptick in input costs seen across the series, which began in April 2011. However, they mentioned increased raw material, electricity and transport costs.
As a result, output prices remained relatively unchanged, with the index posting only fractionally above the neutral 50.0 mark. It highlighted that some companies were reluctant to increase prices amid efforts to prop up new work.
“Looking ahead, sentiment moderated to its weakest position in 25 months. Following a more optimistic start to the year, recent survey periods suggested a less upbeat outlook at Egyptian firms. That said, overall sentiment was positive, with many companies hoping that market stability will encourage demand to pick-up in the future,” according to the survey.
