Egypt's business conditions show signs of recovery: PMI

CAIRO – 6 March 2017: Business activity for Egypt’s non-oil private sector showed signs of stabilization as Emirates NBD Egypt Purchasing Managers’ Index (PMI) rose to its highest level in six months, despite remaining in contraction.


The Emirates NBD PMI headline index inched up for the third straight month to 46.7 in February, up from 43.3 in January, extending a 17-month squeeze, since readings below 50 mark a deteriorating business, according to the survey.


Sharp declines in both output and new work stood behind the latest downturn, said The Emirates NBD.


"There were some encouraging signs from Egypt’s survey. The new export orders component continued to edge up as firms have benefitted from a boost to competitiveness," said Jason Tuvey, Middle East Economist at London- based Capital Economics.


Tuvey added in a Monday report that the Egyptian pound's recent strengthening eased price pressures, leading the input price component to stay at a one-year low last month.


However, he predicted it will take time for this to reflect onto consumer prices, which soared by 28.1percent y/y in January. "High inflation will erode households’ real incomes and act as a major drag on consumer spending," he said.


Meanwhile, the survey reported that the degree of optimism among Egyptian firms improved to an eight-month high amid expectations that market conditions will improve, thereby boosting output over the coming year.