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Egypt non-oil business continued to deteriorate during June PMI - Daily News Egypt

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Egypt non-oil business continued to deteriorate during June PMI

New export orders grew for its third consecutive month as weaker pound draws interest


Egypt’s non-oil private sector continued to deteriorate during June but at a modest pace that was broadly in line with the trend observed throughout the second quarter of 2017, a survey conducted by Emirates NBD Egypt revealed.

Emirates NBD Egypt Purchasing Manangers’ Index (PMI) gauge came in 47.2 in June, broadly similar to last month’s reading 47.3.

“Egypt’s non-oil business continued to deteriorate during June — its 21st consecutive month — but at a modest pace that was broadly in line with the trend observed throughout the second quarter (Q2) 2017,” said the report. Firms continued to cite weak domestic demand conditions as weighing on activity and new order growth, said the Head of MENA Research at Emirates NBD Khatija Haque.

Meanwhile, the survey noted that new export orders grew for its third consecutive month as weaker pound draws interest from overseas markets.

“Growth  in  new  export  orders  continued  for  the  third month  in  succession  amid  reports  of  greater  interest  from  international  markets.  Currency weakness led to further input price pressures, and firms raised average selling prices but at the slowest pace in 16 months,” the report said.

The  survey,  sponsored  by  Emirates  NBD  and  produced  by IHS Markit, contains original

data collected from a monthly survey of business conditions in the Egyptian private sector.

However, firms continued to cite weak domestic demand conditions as weighing on activity and new order growth.

The latest index reading signalled a solid deterioration in the overall health of the sector. However, the PMI average for the 2Q of 2017 (47.3) was the highest since Q3 2016 and considerably better than those seen around the turn of 2017.

The overall downturn in the non-oil private sector was led by a sharp fall in output, although the

rate  of  contraction  was  only  slightly  below  April’s nine-month  low.

Panellists  linked  the  fall  in business activity to weak underlying demand conditions.

New  orders  contracted  at  a  marked  pace,  but  at  the  joint  weakest  in  the  past  ten  months.

Unfavourable  economic  conditions  and  high  prices  continued to  weigh  on  domestic  demand,

according to anecdotal evidence.

New exports rose for the third successive month in June amid reports of new contract wins from

overseas markets.

Firms  continued  to  cut  payroll  numbers  in  June,  although the  rate of job shedding eased from

the prior month and was only modest.

The non-oil private sector saw a renewed contraction in purchasing activity. Subsequently, input

stocks  fell  sharply,  as  firms  continued  to  draw  on  existing  stocks  amid  reports  of  high  raw

material prices.

On the price front, sharp input price pressures were predominantly driven by currency weakness

relative to the US dollar, although the rate of inflation was the second-weakest in 16 months.

A sharp  rise  in  output  charges  was  observed  in  June,  although  the  rate  of  inflation  eased  to  the weakest  in  16  months.

Firms  remained  optimistic  regarding  business  prospects  over  the  coming  year.  Respondents

commented  on  hopes  of  stability  in  currency  markets  and  economic  conditions,  alongside

projections of new contracts as the key reasons behind business confidence.

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https://wwww.dailynewssegypt.com/2017/07/05/egypt-non-oil-business-continued-deteriorate-june-pmi/
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