Tuesday 03, October 2017 by Georgina Enzer

Emirates NBD Egypt PMI: Business confidence climbs to 15-month high

The downturn in the Egyptian non-oil private sector was extended to September, but companies were strongly optimistic towards growth prospects.

Worsening business conditions stemmed from ongoing reductions in new orders and output, whilst job shedding accelerated to the fastest in eight months. Furthermore, new export orders declined for the first time since March. On the price front, rates of input cost and output charge inflation based.                                                                  

The survey, sponsored by Emirates NBD and produced by IHS Markit, contains original data collected from a monthly survey of business conditions in the Egyptian private sector.

Commenting on the Egypt PMITM survey, Khatija Haque, Head of MENA Research at Emirates NBD, said:

“Improving export demand had been the one bright spot in the PMI surveys over the last few months, but unfortunately this seems to have reversed in September, with new export orders declining for the first time in six months. Both output and total new orders fell at a faster rate in September as domestic demand remained weak. However, businesses were more upbeat about the outlook for the coming year, with expectations for as a more stable currency and lower inflation.” 

Key Findings

  • Optimism improves further in September
  • Price pressures ease
  • Vendor performance improves at record rate

At 47.4 in September, the headline seasonally adjusted Emirates NBD Egypt Purchasing Managers’ Index™ (PMI) – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – fell from 48.9 in August to the lowest reading in three months. The figure signalled a solid deterioration in the health of the Egyptian non-oil private sector.

A key contributor towards the latest deterioration in business conditions was a marked and accelerated contraction in Egyptian private sector output. Many panellists linked the reduction in business activity to weak underlying demand.

New orders slipped further in September, indicating subdued demand for Egyptian-produced goods and services. That said, the rate of contraction remained moderate overall and slower than its long-run average.

Inflows of new business from abroad fell sharply in September, recording a contraction for the first time since March. Many panellists reported that political and economic uncertainty in neighbouring countries hampered foreign demand.

Vendor performance improved to the greatest extent since the survey began in April 2011. Excess capacity at suppliers due to a fall in buying levels led to faster delivery times, according to anecdotal evidence.

Employment continued to decline in the latest survey. Furthermore, the rate of job shedding was the quickest in eight months. Firms frequently noted that lower output requirements led them to reduce payroll numbers.

Price pressures eased in September. Both output charges and input prices rose at the slowest rates in three months. Slower increases were noted for purchase costs and staff salaries.

Finally, optimism towards future growth prospects in the Egyptian non-oil private sector improved in September. Anticipated currency stability and an expected economic upturn were the main reasons cited by monitored firms as likely to support output growth in the year ahead.

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