Egypt: PMI recovers ground in March, but remains in contraction territory
April 5, 2015
The HSBC Egypt Purchasing Managers’ Index (PMI) increased from 46.8 in February to 49.6 in March. Despite the improvement, the PMI is still 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 first quarter of this year.
March’s result reflects a third consecutive contraction in production levels and a fourth straight month in which manufacturers cut employment. In positive news, new orders returned to growth for the first time this year. However, political and economic uncertainty continues to weigh on new business. Meanwhile, the depreciation of the Egyptian pound against the U.S. dollar is pushing up inputs costs.
HSBC analysts noted that, “Egypt’s non-oil private sector remained in contraction territory in March, continuing the trend observed so far in 2015. Subdued demand conditions led to further declines in output and employment during the month. Meanwhile, the weaker currency continued to place upward pressure on input costs. As a result, the outlook for Egypt remains uncertain, with the depreciating pound providing a key source of instability.”
Author: Carl Kelly, Economist