Egypt’s non-oil private sector activity shrank to its lowest level since December 2017, reaching 48.5 in January 2019, down from 49.6 in December2018, according to Emirates NBD-Egypt Purchasing Managers’ Index (PMI).
On a positive outlook, there were some promising readings, which could lead to an improvement in the Egyptian economy in the coming months, according to the PMI report.
The main results of the index indicated that outputs production and new orders components fell in January, but purchases of production inputs grew at a strong pace, and sales prices fell as supply costs inflation declined.
The index also revealed that companies are expanding their purchasing activity to a 12-month high as a result of lower raw material prices. However, the overall stock fell marginally.
Commenting on the results, Daniel Richards, MENA economist at Emirates NBD, said that despite the poor headline reading in the Emirates NBD PMI for Egypt’s non-oil private sector in January, it fell from 49.6 in December to 48.5 in January, the lowest level since December 2017 – be that as it may, there were some promising data in the sub-components that could presage an improvement in the Egyptian economy in the coming months.
He explained that Egypt has achieved a recovery over the past two years driven mainly by external rebalancing and public investment, while the private sector has remained under pressure, in part as a result of ongoing reforms.
“Nevertheless, while contractionary, 2018 was on average (49.5) the strongest year in the PMI since 2014, and we anticipate a continued strengthening in the private sector this year,” he added.
Notably, Egypt has adopted an economic reform programme with the IMF in November 2016, as part of $12bn loan agreed with the IMF, which included the currency flotation, the introduction of a value-added tax, and the gradual removal of subsidies.