Egypt PMI March 2016

Egypt

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.”

FocusEconomics Consensus Forecast panelists expect total investment to rise 6.3% in fiscal year 2016. The panel expects total investment to increase 6.6% in fiscal year 2017.


Author: Teresa Kersting, Economist

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Egypt PMI March 2016

Note: Emirates NBD Purchasing Managers’ Index. Readings above 50 indicate an improvement in non-oil business conditions while readings below 50 indicate a deterioration.
Source: Emirates NBD and Markit.


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