Egypt's PMI recorded to 48.9 in September

CAIRO – 5 October 2021: IHS Markit Egypt Purchasing Managers’ IndexTM (PMI) recorded 48.9 in September, recording its lowest in four months, down from 49.8 in August.

The index was below the 50.0 neutral mark for the 10th month in a row, signaling a contraction in the non-oil economy.

It revealed that output was down slightly at the end of the third quarter of 2021, following a fractional upturn during August.

Firms also reported a slight decline in new orders received during the month, which was linked to a fall in client demand and weak economic conditions. In particular, sales to foreign customers dropped sharply and for the first time since March, according to the revealed data.

According to the PMI, the overall level of optimism climbed to the highest recorded since this particular series began in April 2012, with around 71% of panellists giving a positive forecast. The improvement came amid a boost to Egypt's vaccination rate and easing of travel measures around the world to support tourism activity.

"While the latest PMI data pointed to non-oil output and new orders declining at the end of the third quarter, these reductions were only slight, while the two indices remained above their long-run averages for the fifth month in a row,” Economist at IHS Markit, David Owen commented.

Omen added that confidence towards future activity soared to a record high in the series nine-year history. The rise coincided with a faster vaccination program in Egypt and a further relaxation of travel measures that should aid tourism income in the fourth quarter.

"While there was also further supply risk from lower inventory levels and raw material shortages, a record improvement in vendor performance suggests that firms may start to see procurement issues ease,” he added.

It stated that firms' employment numbers rose for the third successive month in September, although the rate of job creation remained mild as some companies struggled to find staff replacements. In addition, firms largely found that current capacity was sufficient to meet new orders, with backlogs rising only slightly from August.

For the second month running, Egyptian non-oil companies were forced to deplete their inventories of purchases in September, as several reported difficulties buying new inputs due to global shortages. Purchasing activity rose in an effort to balance overall stocks, although the pace of increase slowed from August. More positively, delivery times for inputs improved at a new record pace in September, as rising demand for suppliers led them to boost their capacity, it noted.