Egyptian non-oil private sector dips to 49.4 in August: PMI

CAIRO – 4 September 2019: Egypt’s Emirates NBD Purchasing Managers’ Index (PMI) for the non-oil private sector contracted to49.4 in August, down from 50.3 in July.

HIS Markit said in a report that business sentiment around future activity soared to the highest in one-and-a-half year in August, as more Egyptian firms expressed optimism for growth.

“Nevertheless, present operating conditions were subdued, mainly due to mild declines in output and new orders. Employment improved for the first time since April, but backlogs grew amid issues with liquidity.

Input cost inflation meanwhile ticked up as pressure from higher fuel prices persisted. As such, firms raised selling charges at the fastest rate in a year,” it added.

Economist at IHS Markit David Owen commented that business conditions in Egypt's non-oil economy deteriorated slightly during August.

The headline PMI was at 49.4, below the crucial 50.0 no-change mark but still higher than the series average.

Owen said that the decline was due to a drop in sales which, whilst down for the third time in four months, was the weakest fall seen in this period.

He added that meanwhile companies are appearing increasingly optimistic for the year ahead.

Sentiment has been subdued since mid-2018, but is starting to pick up now amid hopes of a recovery in growth.

“That said, concerns around current economic and employment conditions are still being highlighted by panelists as limiting business activity.”

"Input costs rose at a heightened pace again due to recent subsidy reforms that caused a spike in fuel prices.

The impact of these reforms should ease soon though, leading to lower rates of inflation, as underlying cost pressures appear mild," he elaborated.

The report noted that despite difficult conditions at Egyptian non-oil companies, the outlook for future activity continued to improve.

The level of sentiment among surveyed firms was the strongest in one-and a-half year, with the majority of respondents expecting output to grow in the next 12 months.