Non-oil private sector continues to shrink on falling output, export orders
Non-oil private sector continues to shrink on falling output, export orders: Business activity in Egypt's non-oil private sector remained in contraction in February as export orders continued to fall and output dropped, according to the IHS Markit purchasing managers’ index (PMI) (pdf). The rate of contraction improved marginally from January, inching up to 47.1 from January’s three-year low of 46.0, but the data continues to show “broad-based weakness across output, new orders and employment,” said Phil Smith, principal economist at IHS Markit. Activity in the non-oil private sector has now shrunk for seven months in a row.
Macro conditions are weighing heavily on the private sector, which is already grappling with a “vicious cycle” of domestic market challenges, says Smith wrote. Domestically, firms are pointing to low domestic market demand underpinned by weak labor market conditions, while external demand is also weak.
Declines across output and new orders, pushing firms to cut prices: Companies have been addressing the “soft” demand and cost pressures by reducing average output prices, which Smith says is “encouraging” as firms look to break the cycle of market conditions leading to low sales and staff cuts.
Demand for raw materials dipped, reflecting in a stabilization of supplier delivery times. Prices for purchases, on the other hand, rose marginally in February for the fourth month in a row.
Recruiting fell at the fastest rate since September 2017 and the drop in buying levels was the most marked in almost three years. Overall operating expenses inched up at a modest rate that may be the slowest since April 2011.
Businesses are relatively upbeat but their enthusiasm about the next 12 months has been curbed somewhat, with the degree of optimism hitting its lowest level since last September. Respondents signaled they are concerned about how the covid-19 outbreak will impact the Chinese economy and that sentiment will take a hit. Reuters also has the story.