Egypt: PMI continues to lose steam in February
March 3, 2015
The HSBC Egypt Purchasing Managers’ Index (PMI) fell from 49.3 in January to 46.8 in February. The result was the weakest since September 2013 and the PMI is now further below the 50-threshold that separates expansion from contraction in the non-oil producing private sector. The PMI held in expansion territory during the second half of last year as the economy went on a recovery streak, but operating conditions in the manufacturing sector have faltered in the early months of this year.
February’s result reflects declines in both output and new orders. Subdued demand weighed on production in the non-oil sector. New orders contracted at the quickest pace in more than a year, with instability across the Middle East and shaky global markets dragging on new export business in particular. Moreover, the appreciation of the U.S. dollar against the Egyptian pound led to higher input prices. In addition, reduced activity led to an acceleration in job losses.
HSBC analysts noted that, “latest PMI figures showed Egypt’s non-oil private economy continuing to falter at the start of 2015. Output, new orders and employment all fell solidly – leading to the sharpest deterioration in overall business conditions in almost a year-and-a-half. Meanwhile, the decision to allow the Egyptian pound to depreciate against the U.S. dollar appears to have had an inflationary impact in February, with overall input prices rising at the quickest rate in seven months.”
Author: Carl Kelly, Economist