Egypt’s PMI records 47.1 in February

CAIRO – 3 March 2020: IHS Markit Egypt PMI rose to 47.1 in February 2020, up from 46.0 in January, recording the seventh straight month of contraction in the non-oil private sector.

“Egypt's non-oil private sector remained mired in a downturn in February. Though the PMI improved from January's near three-year low, the latest data continue to show broad-based weakness across output, new orders and employment,” Principal Economist at HIS Markit Phil Smith commented on the survey’s results.

The results revealed that output of goods and services across Egypt's non-oil private sector decreased for the seventh month running in February, with the rate of decline likewise easing since the previous survey period but remaining solid by historical standards.

Smith added that evidence from the survey indicates a vicious cycle of weak labour market conditions leading to lower domestic sales, and subsequently further staff cuts.

To clarify, reports from surveyed firms indicated that weak labor market conditions continued to undermine domestic demand, while data also showed a further sharp decrease in new business from abroad.

At the same time, new orders shrank for the seventh consecutive month and was the second fastest since May 2017, with overseas sales falling further.

"It's encouraging to see that firms are attempting to break this cycle by reducing output prices as part of efforts to boost sales,” he noted.

"Unfortunately for local businesses, the challenging domestic market conditions are being compounded by weakness in external demand, with export orders continuing to fall sharply in February,” Smith clarified.

The results showed that confidence eased for the second month running, with fears about the impact of the coronavirus on the Chinese economy weighing on sentiment.

According to Smith, the outbreak of the coronavirus in China is not only reportedly weighing on export sales, but also dampening business confidence.