Cairo – Mubasher: Headline seasonally adjusted IHS Markit Egypt Purchasing Managers’ Index (PMI) registered its first rise in three months during December 2019.
PMI recorded 48.2, up from a reading of 47.9 in November, which reflects an improvement in the Egyptian non-oil private sector, with a slightly softer and moderate decline in business conditions.
Despite the decline in output, new orders, and employment, expectations improved to its strongest since October, while inflationary pressures remained soft, according to the IHS Markit survey.
Companies reported declines in output and orders, with liquidity issues and a drop in foreign demand seen as the main reasons.
“The IHS Markit Egypt PMI showed some signs of a turnaround in December, with the headline reading increasing for the first time in three months. Despite contracting further, both output and new orders fell at softer rates than in November. This indicates that the downturn in the non-oil sector is beginning to ease,” said David Owen, Economist at IHS Markit, commenting on the latest survey results.
Accordingly, this has resulted in businesses cutting job numbers for the second consecutive month.
Several firms noted that falling sales led them to reduce labour, with others linking the decline to not replacing voluntary leavers, according to the survey report published on Monday.
On the positive side, inflationary pressures remained cool, as a strong exchange rate against the US dollar helped businesses operating in Egypt import goods at cheaper rates.
However, the overall increase in costs was slight with some companies attributing it to higher electricity bills and customs duties.
“The clear positive from the survey is that the strong exchange rate with the US dollar is helping to restrain input costs inflation. Companies have responded with solid reductions in output charges during the past two months, which may help to boost sales in the near future. Upcoming PMI releases will show whether the non-oil sector can be swiftly reinvigorated,” Owen further noted.
Consequently, businesses were encouraged to lower selling prices for the second month in a row, with many hoping to increase sales through discounts
The outlook improved last month with a degree of optimism stronger than the average for 2019, with survey respondents expecting business to rebound on the back of expansion and a stronger local currency.
