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Emirates NBD Egypt PMI |
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Input cost inflation eases to new record low in DecemberToday sees the release of December data from the Emirates NBD Purchasing Managers’ Index™ (PMI™) for Egypt. 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 PMI™ survey, Daniel Richards, MENA Economist at Emirates NBD, said: “The Emirates NBD Purchasing Managers’ Index (PMI) for Egypt is closing the year on a positive note as it climbed to 49.6 in December, compared to 49.2 the previous month. While this is still short of the neutral 50.0 level which delineates contraction and expansion in the non-oil private sector, it is nevertheless a four-month high for the index, and there are other factors within the survey data which suggest that the Egyptian economy will begin 2019 in a relative position of strength. The annual average PMI scores have improved from 46.0 in 2016 (Egypt entered into its IMF-sponsored reform programme in November that year) to 47.5 in 2017 and 49.5 this year, and indications are that this improvement will continue in 2019. “While output weakened at a more rapid pace in December than in November – 48.8 from 49.2 – new orders showed the highest reading since August, boding well for future output levels. There was also an increase in firms’ purchasing activity, with the index recording its highest reading since May, as respondents cited increased business requirements. While external rebalancing and public investment have driven the growth recovery in Egypt to date, private sector activity has lagged somewhat, but the expectation is that it will see something of a recovery in 2019. This will be supported by the World Bank which has recently reaffirmed its commitment to the Egyptian private sector.” The main findings of the December survey were as follows: Purchase prices increase at softest rate in over six years The 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 49.2 in November to 49.6 in December, signalling a softer deterioration in the health of the sector. The index was at a four-month high, moving closer to the 50.0 mark that separates expansion from contraction. The improvement in the headline index was supported by the weakest fall in new orders in the current four-month sequence of reduction. While many panellists continued to report poor market conditions, others saw downward pressures fade and demand strengthen. Foreign orders also declined at a slower pace. Nevertheless, output at Egyptian firms contracted at a slightly faster rate in December. The drop remained marginal though. Encouragingly, purchasing activity expanded at the strongest pace in seven months, as a number of firms scaled up input buying in response to new business gains. Employment declined modestly in December, completing a full quarter of job cuts. Anecdotal evidence pointed to a number of retirements and people leaving for other roles. Despite this, the level of outstanding business grew only fractionally and at the weakest rate in six months. Input cost inflation eased further in December, setting a new record low across the survey history. This was largely due to the softest uptick in purchase prices in over six years. Salaries continued to grow solidly, albeit at a weaker pace compared to November. Concurrently, output prices increased only marginally, although the rise was slightly faster than November’s 34-month low. Sentiment remained relatively subdued across Egypt’s non-oil private sector in December. Most companies expect output to be unchanged in the coming 12 months, while 24% forecast an improvement, with a few planning to grow their business. The respective index was at its second-lowest mark in 26 months. |
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