PMI signals further improvement in business conditions
Cairo, September 4th, 2018: Today sees the release of August 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:
Egypt’s headline PMI reading of 50.5 in August was the first time since September 2015 that two consecutive months have returned positive readings, suggesting that the Egyptian non-oil private sector is beginning to see the protracted recovery we had projected would take hold in the new fiscal year.
The main findings of the August survey were as follows:
- Headline PMI increases to 50.5 in August
- New orders and exports continue to rise
- Jobs growth accelerates to fastest in survey history
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 50.3 in July to 50.5 in August. The latest reading highlighted a further improvement in operating conditions across Egypt’s non-oil private sector, albeit one that was only marginal.
The above-50.0 PMI reading was supported by new orders rising for the second consecutive month in August. There were reports that greater demand from both domestic and international markets underpinned the latest rise in new business. That said, the expansion was marginal and softened from the preceding month. Meanwhile, although marginal, the latest gain in new export orders quickened from the prior survey period.
Latest survey data indicated that output stabilised during August, thereby ending a three-month period of contraction.
In response to greater inflows of new work, firms raised their staffing levels during August, thereby ending a 38-month sequence of job shedding. Furthermore, the rate of employment growth was the most pronounced since the inception of the survey in April 2011.
Despite easing from July’s recent high, overall input cost inflation remained sharp in August, driven by rises in both salaries and purchases costs. The latter was the primary factor behind overall cost pressures, with survey respondents commenting on higher fuel, electricity and iron ore prices. In line with the trend for input cost inflation, firms raised their output charges at a sharp, but slower pace than in the previous month.
Reflecting a rise in new business, Egyptian non-oil companies raised their purchasing activity in August. That said, the latest rise was marginal.
Firms retained optimism towards the 12-month outlook for output amid hopes of stability. However, reflecting expectations of high prices and a potential market slowdown over the year ahead, positive sentiment eased to the weakest since October 2016.