Egypt: PMI falls back to contractionary territory in July
August 4, 2015
The Emirates NDB Egypt Purchasing Managers’ Index (PMI) inched down from 50.2 in June to 49.2 in July, falling below the 50-threshold that separates expansion from contraction in the non-oil producing private sector. June’s result had marked the first reading above the 50-threshold this year. July’s result suggests that the manufacturing sector continues to struggle amid challenging economic conditions.
Moderations in output and new orders, including new export business, drove the poor result. Manufacturers cited domestic security concerns and weak global demand as reasons for the slowdown. Moreover, there was also a decline in employment and purchasing activity.
Emirates NBD analysts noted that, “the drop in July raises the possibility that Egypt’s macroeconomic recovery may have stalled at the start of FY2015/16. That said, assuming the two biggest factors that are undermining private sector business activity at the moment – security risks and FX liquidity shortages – improve in the coming months, we would be optimistic that growth momentum can accelerate in H2.”
Author: Carl Kelly, Economist