Cairo – Mubasher: The downturn of the Egyptian non-oil private sector eased in July, as new orders stabilised, ending a 21-month decline, according to the Purchasing Managers' Index (PMI).
The survey, sponsored by Emirates NBD and produced by IHS Markit, showed that input buying fell marginally due to output slowing to a 12-month low, which led firms to reduce their staffing level.
Firms saw a “sharp pick-up in input cost inflation”, while new export orders increased for the fourth month in a row, growing only grew marginally and slowing to the “weakest in the current sequence of expansion”.
Khatija Haque, head of MENA Research at Emirates NBD, said: “Egypt’s economy appears to be stabilising, with new orders unchanged in July following nearly two years of contraction.
“However, firms saw input costs rise sharply on the back of higher fuel costs as subsidies were cut further at the end of June. Inflationary pressure is likely to remain elevated as higher electricity tariffs came into effect this month,” she added.
The headline seasonally adjusted Emirates NBD Egypt PMI rose slightly above the long-run average to 48.6 at the start of the third quarter from 47.2 in June.
Although the Egyptian non-oil private sector showed a “slowdown in the contraction of output and new orders stabilising for the first time in 22 months”, the decline in operating conditions was revoked by reports of consecutive higher prices, weighing on underlying demand conditions.
The purchasing activity of firms decreased marginally during July, linking this to lower demand levels. Therefore, firms reduced inventories for the thirty-first month in a row.
The downturn trend continued to spread in the labour market, as firms lowered their payroll numbers.
Firms recorded the fastest growing input cost inflation since January, bolstered by higher purchasing prices and staff costs, the report stated, highlighting “greater prices for raw materials and energy”.
Finally, the degree of optimism among Egyptian firms remained the same with regards to output growth over the next twelve months, and some companies hoping that the currency markets and economic conditions improve, the report concluded.
