Survey indicates a slight rise in growth, but business confidence still low
Egypt’s PMI improved in August as export orders grow
Egypt’s non-oil private sector rose to its highest in 23 months, according to the latest purchasing managers’ index (PMI).
The headline seasonally adjusted Emirates NBD PMI survey produced in association with IHS Market indicates a rise in growth in the non-oil private sector to 48.9 last month, up from 48.6 in July. Khatija Haque, the head of Mena Research at Emirates NBD, said that the improvement still left Egypt in contraction territory.
“New orders declined only marginally after stabilising in July, and new export orders increased at the fastest rate since May,” she said. “Inflationary pressure remained high in August as electricity tariffs were increased last month.”
The largest Arab economy suffered a 31-year inflation rate high in July as the government continues to cut subsidies coupled with November’s decision to devalue the Egyptian pound. These decisions were taken to acquire a US$12 billion loan from the IMF in order to help the economy rebound from the turmoil that began in 2011.
Firms are continuing to pass the larger costs of products onto customers, increasing selling prices. However, the August PMI survey indicated that firms faced with lower output requirements were pushed to reduce payrolls and purchases.
“Panellists commented that higher cost inflationary pressures and unfavourable economic conditions caused the fall in business activity,” the report said. “The combination of increased fuel prices, high VAT and currency instability fed through to greater raw material costs, according to respondents.”