Cairo – Mubasher: Egypt’s score in the Emirates NBD Egypt Purchasing Managers’ Index (PMI) edged down to 45.9 in March from February’s six-month high of 46.7, indicating worsening business conditions at the end of the first quarter of 2017.
The fall reflects steep declines in output and new work, weak underlying demand, and unstable economic conditions amid high inflationary pressures and currency weakness relative to the US dollar exchange rate against the local currency, the new report released by Emirates NBD and produced by IHS Markit noted.
Inventory holdings fell for the 27th consecutive month as lower volumes of incoming new business prevented firms from raising their input buying and existing inventories were sufficient to fulfill output requirements.
Due to a weak exchange rate of the EGP against the USD and the rise in raw material prices, companies in the non-oil sector passed on higher input costs to their clients. Nevertheless, inflation rates fell to a 13-month low, but remained sharp.
For the first time in 18 months, backlogs of work decreased, while job shedding eased to the weakest in over a year.
Further findings of the PMI report lower new export orders, mainly attributed to the security situation in Libya, leading to a reduction of total new business.
Tim Fox, head of research and chief economist at Emirates NBD, commented on the report: “The March PMI highlights ongoing weakness in Egypt's private sector. Although the economy's rebalancing process is proceeding as one would expect - evident through a narrowing in the trade deficit and higher foreign exchange reserves - it will take some time before this translates into stronger growth momentum.”
