Egypt: In April, business conditions improve for the first time since November last year
May 3, 2018
The Emirates NBD Egypt Purchasing Managers’ Index (PMI) rose to 50.1 in April from 49.2 in March. As a result, the print landed above the 50-threshold which separates expansion from contraction in the non-oil private sector for the first time since November last year.
April’s improvement came amid an increase in new orders, specifically export orders, and a stabilization in output, which had contracted in the two months prior. However, in April, business suppliers’ delivery times lengthened on the back of raw material shortages. In terms of prices, businesses also faced greater input costs in April due to higher purchasing prices and labor expenses. On the back of this, firms raised their output prices and allowed their headcount to fall. In terms of inventories, input buying increased for the seventh consecutive month, but inventory stocks reduced. Meanwhile, with improvements in demand conditions expected over the coming 12 months, business sentiment among firms increased in April.
Reflecting on April’s result and what it means going forward, Daniel Richards, MENA Economist at Emirates NBD, said:
“The Emirates NBD Purchasing Managers’ Index for Egypt broached the 50.0 level for only the second time in 31 months in April, indicating that the non-oil private sector is finally starting to contribute to the positive growth story underway in the country. We anticipate that the PMI will be more consistently positive over the coming quarters, as ongoing economic reforms and loosening monetary policy encourage greater private sector activity.”
Author: Edward Gardner, Economist