Cairo – Mubasher: Egypt’s non-oil private sector sill faces harsher business conditions, while Saudi’s and UAE’s show further expansion, said MubasherTrade Research (MTR) according to the Purchasing Manager Index’s (PMI) reading for December 2016.
Regardless Egypt’s m/m PMI increase, rising costs is still pressuring the private sector, leading to lower output, new orders and input buying, said the research agency in a report published on Thursday.
The private sector is forecast to be affected adversely over the coming months on inflationary pressures that are likely to keep waters running dry.
“Higher costs of production, reflected on higher pricing, will likely impact client demand negatively. We may see a more “relaxed” pattern for PMI readings by H2 2017, as businesses adjust their cost structures to the new conditions”, the report revealed.
Saudi Arabia’s PMI, on the other hand, saw an improvement in output expansion, a higher demand as well as more expensive input purchasing, though, with a 55.5 reading in December against 55.0 a month earlier.
“All output, purchasing activity and new orders increased. Better market demand was the main driver of output expansion. While businesses faced higher costs of purchasing and more costly input, stronger demand encouraged them to pass on these costs to clients, raising their own prices”, the report revealed.
Accordingly, the research firm maintains its forecasts of a modest growth for Saudi non-oil private sector in the coming period as still endeavoring to cope with austerity measures adopted recently.
“We believe the upcoming months will witness some reforms and new measures regarding energy prices and expat fees that will affect cost of production for businesses considerably. This may reflect on soft improvements in PMI with some shot-lived hiccups along the year, albeit still in the expansionary zone”, MTR revealed.
This growth momentum was stretched to UAE after its PMI recorded the highest reading since July. The index saw a m/m increase from 54.2 in November to 55.0 in December on higher demand and sales efforts, in addition to a better external demand and growing export orders.
“We believe the UAE’s non-oil private sector will keep its growth momentum in the near future. Gradually improving economic conditions and rising export demand should help UAE businesses keep their expansion outlook over the next months”, MTR concluded.
