Egypt's PMI records 49.3 during February

CAIRO – 3 March 2021: IHS Markit Egypt Purchasing Managers’ IndexTM (PMI) recorde 49.3 in February, up from 48.7 in January.

Egypt’s PMI signed only a slight deterioration in operating conditions, according to the report.

It added that the rate of decline was the softest for three months, and the index was also above its long-run average of 48.2.

"Business conditions in Egypt's non-oil private sector continued to decline in February, extending the latest dip in the economy seen since the end of last year and largely cancelling out the small rebound between September and November 2020,” Economist at IHS Markit, David Owen, said.

He added that on the upside, demand trends have moved closer to stabilisation, particularly as export sales picked up at a record pace during the month. Further growth in exports should help to improve overall sales in the future.

"Meanwhile, employment fell at a slower rate in February, as some firms expanded their staffing levels to account for an increase in workloads. Alongside business sentiment data, this gives promising signs for an expansion in output as the impact of the COVID-19 pandemic subsides, though panellist comments suggested that some businesses may fail before the economy makes a full recovery,” he added.

HIS Markit noted that private sector output decreased for a third straight month in February, which companies related to a drop in sales amid the continued impact of the coronavirus disease 2019 (COVID-19) pandemic.

It attributed the drop in new sales, which was less marked compared to that seen in January, to a strong upturn in export demand. “In fact, the rate of new foreign business growth was the sharpest in nearly ten years of survey data collection.”

Reductions in output and new orders led Egyptian companies continued to lower their purchasing activity in February, extending the decline seen since the end of 2020. Inventories of purchased items were also driven down, albeit only marginally, according to the report.

“Job numbers continued to fall midway through the first quarter, as some firms mentioned that they did not replace voluntary leavers in an effort to lower staff costs,” it added.

As for outlook of the upcoming year, it worsened in February, although companies still expect output to pick up from current levels.