Egyptian non-oil private sector hits 47.4 in September: PMI

CAIRO – 3 October 2018: Egypt’s Emirates NBD Purchasing Managers’ Index (PMI) for the non-oil private sector fell to 47.4 in September, recording the lowest level since June, compared to 50.5 in August.

The neutral level of Emirates NBD Purchasing Managers’ Index (PMI) is 50 which delineates contraction and expansion in the non-oil private sector.

According to the released data, all components of the headline index declined in September, except for inventories, which slipped at a slower rate than in August.

Output reached the level of 46.5 in September, falling at the sharpest rate in four months. Panelists attributed the decrease of output to “weak underlying demand.”

Emirates NBD research said that new orders also contracted at a slightly faster rate in September.

Moreover, new export orders fell for the first time in six months, suggesting that external demand was weaker in September as well.

Survey respondents highlighted “political and economic uncertainty in neighbouring countries” as a factor hampering foreign demand, according to Emirates NBD research.

“Perhaps unsurprisingly given the weakness in output and new orders, employment declined at the sharpest rate since November 2016. However, rising staff costs may also have contributed to fewer jobs. Wage inflation has accelerated in recent months in response to the higher cost of living, although the rate of increase slowed slightly in September,” data stated.

Overall input cost inflation eased in September, but producer price pressures remain high with the index at 68.8.

“Higher VAT was one reason given for both higher input costs and higher selling prices. Output prices increased at a slower rate last month (54.3) however, suggesting that the official CPI is likely to continue to ease,” it attributed.

The data read that despite this decline in economic conditions in September, businesses optimism improved to the highest level since June 2017, clarifying that nearly 70 percent of firms surveyed said they expect their output to be higher in 12 months’ time, while only 11 percent expected their output to decline over the same period.

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

In July, Egypt’s Emirates NBD Purchasing Managers’ Index (PMI) for the non-oil private sector hit 50.3.