Egypt: Non-oil private sector contracts at fastest pace on record in April
May 5, 2020
Egypt’s Purchasing Managers’ Index (PMI), which measures business activity in the non-oil private sector, fell to 29.7 in April, down from 44.2 in March and the lowest reading since the current survey began in April 2011. Readings below 50 indicate an overall decrease compared to the previous month. April’s outturn highlights the effects of Egypt’s first full month with new social distancing measures in place aimed at reducing the spread of coronavirus, coupled with weaker demand from overseas.
Commenting on the PMI reading, David Owen, economist at IHS Markit, said: "Businesses lucky enough to remain open scaled back activity on a massive scale, as many highlighted sharp falls in domestic sales and foreign demand. Firms forced to close unsurprisingly recorded an even steeper decline in output.” Owen added, “Employment levels dropped again in April, although the rate of decline was much softer than for activity. An extended period of weaker output may lead to larger job reductions in the future.”
In terms of prices, lower fuel prices led to weaker input cost inflation in April, while output prices decreased for the sixth consecutive month. On the outlook, business confidence improved slightly, as businesses were hopeful social distancing measures would be relaxed soon. However, some firms were concerned about the prospect of a prolonged economic downturn.
Author: Edward Gardner, Economist