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Wednesday, 6 March 2019

Egypt’s non-oil business activity falls to 17-month low: PMI

Non-oil business activity falls to 17-month low, sentiment hits 10-month high: The Egypt purchasing managers’ index (PMI) contracted for the sixth consecutive month in February to reach a 17-month low, according to Markit / Emirates NBD data. The index fell to 48.2 last month from 48.5 in January, “signalling a moderate deterioration in the health of the non-oil private sector economy.” Companies surveyed in the index attributed the decline to low sales, bad weather, and a lack of liquidity. February’s reading is “substantially weaker than the 2018 average of 49.5 … and while we continue to expect an improvement in conditions over the course of 2019, Egyptian firms clearly remain under pressure,” Daniel Richards, MENA economist at Emirates NBD, said.

Weakening market conditions and a drop in exports led to the biggest decline in new orders in 20 months, and foreign demand declined at the quickest rate since October 2016. Output also witnessed the largest decline since September 2017. Purchasing activity also fell for the first time in five months, while stock levels remained unchanged.

Input prices accelerated slightly month-on-month as a result of higher costs of transportation, raw materials, electricity, and water. Businesses offered discounts, leading to output prices declining for the second consecutive month.

Despite all this, business sentiment is at its highest levels in 10 months, with “44% of firms expecting conditions to improve in the coming 12 months. Some pointed to planned business development as a key reason underpinning confidence.”

Egypt is not alone — global PMI output levels were at a 33-month low, according to Markit. Worldwide PMI surveys point to a stagnation in global manufacturing levels, with 13 out of 30 countries included in the global survey reporting a decline in manufacturing “amid a faster decline of global trade flows. Export sales fell for a sixth straight month, with the rate of decrease accelerating.” Falling export orders were also reported by nearly two-thirds of the countries in the survey.

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