Emirates NBD Egypt PMI: Egyptian non-oil private sector returns to growth

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Monday - 4 December 2017

The Egyptian non-oil private sector returned to expansion in November, ending a 25-month sequence of deterioration. Renewed growth of output, new orders and stocks of purchases all contributed to the latest improvement in business conditions. Furthermore, foreign demand for Egyptian-produced goods and services reached a record high. On the price front, rates of both input cost and output price inflation softened, falling below their respective long-run averages. The survey, sponsored by Emirates NBD and produced by IHS Markit, contains original data collected from a monthly survey of business conditions in the Egyptian private sector. Commenting on the Egypt PMITM survey, Daniel Richards, MENA Economist at Emirates NBD, said, “Egypt’s PMI readings turned positive in November, signalling an expansion in the non-oil sector for the first time in over two years. This suggests that the wide-ranging economic reforms embarked upon in November 2016 as part of an IMFsponsored programme are beginning to bear fruit. Strong sentiment towards future prospects chimes with our view that the Egyptian economy will continue to strengthen over the coming quarters.” At 50.7 in November, the headline seasonally adjusted Emirates NBD Egypt Purchasing Managers’ Index™ (PMI) – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – rose from 48.4, and signalled an end to the downturn recorded over the past 25 months. The improvement was the strongest recorded since August 2015, albeit only slight overall. Output in the Egyptian non-oil private sector grew in November, ending a 25-month sequence of deterioration. Panel members linked the rise in business activity to higher inflows of new orders. Demand for Egyptian-produced goods and services increased during November. Inflows of new work returned to growth, recording the fastest expansion for 27 months. Furthermore, demand from foreign sources rose at the fastest pace since the survey began. According to anecdotal evidence, the improvement in new export orders was linked to an upturn in demand from neighbouring economies. In response to higher output requirements and in anticipation of further growth, non-oil private sector companies increased their buying activity. Quantities of purchases rose at a solid rate overall, whilst pre-production inventories were accumulated at the fastest rate since November 2014. Meanwhile, job shedding continued, albeit at a marginally slower pace than that recorded in the preceding survey period. The latest data thereby extended the current sequence of declining employment levels to 30 months.