Cairo – Decypha: Non-oil private sector in Egypt has witnessed a continued decline in their production, job creation levels and the new records of orders, which prompted companies to reduce workforce number and to be hesitant in their purchases, according to a report a report by Emirates NBD Egypt.
Prices of products have kept rising affected by weak USD exchange rate against the EGP, although inflation rates have begun to ease.
The purchasing managers’ index (PMI index) has fallen from 46.7 points in February, which was a six-month high, to 45.9 points in March, “marking worsening in business conditions,” the PMI report stated.
Trimming the trade deficit and higher foreign reserves will take time to be translated into better economic conditions, said Tim Fox, Head of Research and Chief Economist at Emirates NBD.
March has seen the weakest rates of change and cost of production inputs in Egypt in more than a year and the weakest quantities of purchases in eight months, according to the report.
Low new export orders, shaky economic conditions and the high inflation have contributed to slowing down the business in Egypt. “Panellists linked the fall in foreign demand to security issues in Libya,” read the report.
As a result, inventory levels have continued to fall for the twenty-seventh month, as current stock levels were adequate to the market needs.
The exchange rate is still forcing pressure on raw material prices with companies reacting to high input costs by raising prices to their clients, which caused price increase in average prices, the PMI index said.
Backlogs have declined as well for the first time in one and a half years, stemming from difficulties in getting new raw material for production.
The PMI is an indicator of the economic health of the manufacturing sector, and it is based on five major main indicators: new orders, inventory levels, production, supplier deliveries, and the employment environment, as defined by Investopedia. The PMI is employed by companies to measure the health of the business environment, and better estimate the effectiveness of their decisions.
By Decypha Editorial Team
