February data signalled a return to expansion for total new orders and an uptick in new export business, indicating growth in demand for Egyptian-produced goods and services, according to the Egypt PMI Report.
Furthermore, the headline PMI registered above its long-run average. In terms of inflation, input costs continued to rise at a sharp rate whilst selling price inflation accelerated. 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.
“Although Egypt’s Emirates NBD Purchasing Managers’ Index remained stubbornly just below the neutral 50.0 mark in February, at 49.7, the data remains upbeat in comparison to recent annual averages. In particular, new orders, new export orders, and business optimism were all in positive territory, supporting our view of a strengthening Egyptian economy, and our expectation that the headline figure will begin to breach the 50.0 level more consistently in the coming quarters,” said Daniel Richards, MENA Economist at Emirates NBD.
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 to 49.7 in February, from 49.9 in January. That said, the Headline PMI registered above the historical average and signalled only a marginal deterioration in the non-oil private sector’s economy.
Non-oil private sector firms reported a renewed expansion in inflows of new business during February. The finding thereby ended a two-month sequence of contraction. Panellists noted stronger demand from both domestic and export markets. Despite the rate of growth being only marginal overall, the expansion was only the third recorded over the past two-and-a-half years.
In line with growth of overall new orders, new business from abroad also expanded during the latest survey period. The rate of growth was at a three-month high in February. Some panel members noted higher demand from EU markets.
Despite growing new business, output from Egyptian non-oil private sector firms contracted during February. The deterioration followed no change signalled in January.
February data signalled the lowest level of job shedding since June 2015. The rate of contraction was only marginal overall. Some firms that reported a fall in payroll numbers noted that retiring employees were not replaced.
Input price inflation softened in the most recent survey and registered below the historical average. That said, the rate of inflation remained sharp overall. Many firms noted higher wage bills and raw material costs.
Reflecting higher average cost burdens faced by Egyptian non-oil private sector firms, output charges rose at a solid pace during February. The rate of selling price inflation quickened to the fastest since last September.
Strong positive sentiment in the non-oil private sector continued in February. The overall level of optimism was well above the historical average. According to anecdotal evidence, higher business investment, an expected economic upturn and new project wins underpinned confidence in the latest survey.