Egypt’s non-oil private sector activity falls to three-year lows as covid-19 hits output, new orders
Stung by covid-19 outbreak, non-oil business activity falls to three-year lows on declining output, dearth of new orders: Egypt’s non-oil business activity continued to shrink in March as the the covid-19 pandemic caused “sharp downturns” in output and new orders, according to IHS Markit’s purchasing managers’ index (PMI) (pdf). The PMI gauge fell to 44.2 in March from 47.1 in February, marking a sharp deterioration in business conditions at the end of the first quarter of the year and the lowest reading since January 2017. A reading above 50.0 indicates that activity is expanding, while a reading below means it is contracting.
Output fell at the fastest rate in more than three years as businesses struggled amid depressed demand. Domestic orders fell due to low employment, businesses said, while export volumes declined at the quickest pace in more than seven years.
Input purchases saw their biggest monthly decline in over three years, with some businesses reporting difficulty getting production inputs thanks to the shuttering of Chinese factories.
A hike in input costs was attributed to rising cost inflationary pressures, mainly due to the appreciation of the USD, and an uptick in the price of raw materials. It was tempered, however, by other price reductions — with oil prices being the most significant. This allowed businesses to reduce output prices albeit at a lower rate than seen in February.
Vendor performance fell for Egyptian businesses as well due to travel disruptions and Chinese factory closures. While the rate of deterioration was modest, it was also the swiftest for 19 months.
Employment fell for the fifth month in a row. Employees left businesses for other jobs and these roles were not replaced due to lower sales, causing a “solid drop” in workforces.
Firms were largely negative in their assessment of future prospects with no end in sight for covid-19. Confidence levels reached series lows as many feared an enduring impact on the domestic and global economy.