Egypt: PMI deteriorates in March, falls to 31-month low
April 5, 2016
The Emirates NDB Egypt Purchasing Managers’ Index (PMI) dropped from 48.1 in February to 44.5 in March, which marked the lowest reading since August 2013. Thus, the PMI index remains firmly below the 50-threshold that separates contraction from expansion in the non-oil producing private sector, where it has been for the last six months.
February’s notable deterioration was largely driven by steeper contractions of output, new orders and employment. On top of this, stocks of inputs recorded the largest decrease on record, reflecting subdued client demand. According to the survey report, companies perceived currency weakness was a key source of uncertainty in March, as firms were worried that the sizable devaluation of the Egyptian pound on 14 March world restrain new work and cause purchasing costs to rise.
Jean-Paul Pigat, Senior Economist at Emirates NBD, noted that, “the deterioration in business conditions is not entirely surprising as the survey took place at a time of elevated uncertainty that coincided with the devaluation of the EGP. Looking ahead, we believe that the move to a more competitive exchange rate has now reduced a key source of risk, and could therefore set the stage for a broader economic recovery in the second half of 2016.”