Egyptian non-oil private sector fell to 49.2 in March: PMI

CAIRO – 3 April 2018: Egypt’s Emirates NBD Purchasing Managers’ Index (PMI) for the non-oil private sector fell to 49.2 in March, compared to 49.7 in February.

Emirates NBD research still anticipates an improvement in the Egyptian economy this year as the negative effects of its IMF-sponsored reforms pass through. The data implies that this is taking longer than the authorities might have hoped.


A graph of Egypt’s PMI and New Exports orders held by Emirates NBD - Emirates NBD Research


In November 2016, The IMF Executive Board approved a three-year Extended Fund Facility (EFT) loan to Egypt worth $12 billion to support its economic reform program.

In December 2017, Cairo received the third $2 billion tranche of its loan, bringing total disbursements to $6.08 billion.

The $2 billion fourth tranche will be received by Cairo after concluding the program’s third review in June.

The research unit attributed in a report on Tuesday its expectations of improvement to the inflation decline, stating that Headline CPI inflation has more-than halved since its peak of 33 percent on a year- on-year basis in July 2017.

Inflation rates recorded its lowest levels in February since the flotation of the Egyptian currency in November 2016.

The annual inflation decreased to 14.4 percent in February, down from 17.1 percent in January.

It added that this decrease has been reflected in the PMI data, with the input price component falling to 61, its lowest level since September 2015.

The PMI report stated that input purchase costs dropped to 61.2 in March, down from 71 a year ago. It clarified that this drop is a major positive for firms that have struggled to pass all of their greater costs onto customers, thereby squeezing their margins and their ability to invest.

New orders were at 50 in March down from 50.3 in February, but still above their yearly average of 48.6, the report added.

It stated that new export orders recorded 51.4 in March on the positive side of the weaker currency.

Egypt's non-oil exports rose 10 percent in 2017 to $22.42 billion, up from $20.41 billion in 2016.

Given that Egypt floated its currency in November 2016 by almost 50 percent in front of the dollar, a step that was part of the economic reforms accepted by Egypt during this period and followed up by the IMF’s loan.

Future output in Egypt remains positive, as 43.7 percent of respondents expected that output will be greater in 12 months’ time.

The report added that those expecting that conditions will worsen remained low at just 3 percent.

According to the report, more than half of respondents believe that the rebound has run its course and that the output will remain at current levels.

The subcomponent index reading was 70.3 in March, down from 80 in February and a 12-month average of 76.9.

Meanwhile, Egypt’s Emirates NBD Purchasing Managers’ Index for the non-oil private sector fell to 49.7 in February, compared to 49.9 in January.