Emirates NBD PMI for Egypt edges up to 50.1 in April

CAIRO – 3 May 2018: Egypt’s Emirates NBD Purchasing Managers’ Index (PMI) for the non-oil private sector edged up from 49.2 in March to 50.1 in April, leaving it just above the 50-mark.

The increase reflects to stabilization in business conditions in Egypt’s non-oil private sector.

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

On the price front, input cost inflation eased to the weakest since May 2015, while charge inflation was at a four-month low, April data showed.

“The Emirates NBD PMI for Egypt broached the 50.0 level for only the second time in 31 months in April, indicating that the non-oil private sector is finally starting to contribute to the positive growth story underway in the country,” Daniel Richards, MENA Economist at Emirates NBD said in a press release.

“We anticipate that the PMI will be more consistently positive over the coming quarters, as ongoing economic reforms and loosening monetary policy encourage greater private sector activity,” he added.

The PMI report showed that business activity stabilized during April, thereby ending a two-month sequence of contraction and that suppliers’ delivery times lengthened in April, attributing it to shortages of raw material and greater inflows of new work at vendors.


Source: PMI report

The data showed that Egyptian non-oil private sector companies faced a further rise in overall input costs during April owing to higher purchasing prices and, to a lesser extent, staff costs.

Although sharp, the rate of overall input cost inflation eased to the weakest since May 2015 and was below its average, the report said.

The report further showed that companies raised their input buying for the seventh consecutive month in April. Although modest, the rate of growth quickened to the fastest since January.

Meanwhile, input inventories declined for the fifth month in succession in April.

The report concluded that the level of business sentiment towards the 12-month outlook for output strengthened in April from March’s recent low. Survey respondents expect an improvement in demand conditions, according to anecdotal evidence

Commenting on the results, London-based research group Capital Economics said that the breakdown of Egypt’s PMI figure showed that price pressures have continued to ease.

“Both the output price and input price index fell, the latter falling to its lowest level since April 2015, supporting our view that the decline in inflation will continue this year and that the central bank’s easing cycle has further to go,” Capital Economics said in a research note.

It expects an additional 350 basis points of cuts in the overnight deposit rate by the end of 2018, to reach 13.25 percent.

In March, the Central Bank of Egypt (CBE) cut key interest rates by 100 basis points for the second time this year.

The overnight deposit rate was lowered to 16.75 percent from 17.75 percent, and the overnight lending rate was cut to 17.75 percent from 18.75 percent.

The cut came on the back of easing inflation that stood at 13.3 percent in March, down from 14.1 percent in February.