Egypt's PMI records strongest rate since 2014

CAIRO – 3 November 2020: IHS Markit Egypt Purchasing Managers’ IndexTM (PMI) posted 51.4 in October, compared to 50.4 in September, recording a second consecutive monthly improvement.

According to the latest PMI survey data, the Egyptian non-oil private sector economy grew at the strongest rate since the end of 2014 during October.

It noted that growth in both output and new orders strengthened, leading to a renewed rise in input purchases. “Nevertheless, job numbers fell for the twelfth month in a row as sentiment dipped to the weakest since May.”

"A PMI reading of 51.4 in October signalled that the Egyptian non-oil private sector expanded at the quickest rate in nearly six years. The relatively strong upturn will encourage businesses, but also highlights the extent of the gap between current and pre-COVID activity levels that firms still need to abridge. Growth could accelerate further if restrictions remain loose, although there are still enduring risks that may slow the recovery,” Economist at IHS Markit David Owen said.

"In particular, weakness continues to lie on the employment side, as jobs decreased more quickly despite higher output and difficulties with completing incoming work. Firms noted that they are still struggling to raise the necessary funds to hire new staff, while also indicating weaker optimism as COVID-19 cases rise in nearby Europe,” he added.

IHS Markit noted that three sub-indices of the headline index supported the PMI uptick, namely output, new orders and stocks of purchases, while the rise was partly offset by the employment and delivery times indices.

It added that the Egyptian non-oil businesses saw a solid increase in activity at the start of the fourth quarter, amid reports of improved market conditions that led to a strong rise in client demand. Firms also noted that they were able to expand capacity due to coronavirus disease 2019 (COVID-19) restrictions remaining looser than seen earlier in the year. Furthermore, the rate of activity growth was the fastest since August 2014.

On the other hand, the drop-in workforces came amid a worsening of business confidence in October, as sentiment regarding the next 12 months of activity fell to the weakest since May. In particular, firms raised concerns of a second wave of COVID-19 cases in Europe that could translate into higher cases in Egypt and hamper the economic recovery.