Egypt’s non-oil private sector registered its first economic upturn in 14 months during September, according to the IHS Markit Egypt PMI.
IHS Markit said that improvements in consumer demand and export sales led to a stronger rise in business activity, whilst inventories levelled off. Moreover, amid a further increase in backlogs, employment fell at the slowest rate in 10 months.
The IHS Markit Egypt Purchasing Managers’ Index (PMI) is compiled by IHS Markit from responses to questionnaires sent to purchasing managers at around 400 private sector companies. It is a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy.
The headline seasonally adjusted IHS Markit Egypt PMI rose from 49.4 in August to 50.4 in September, signalling an improvement during the latest survey period.
“The result marked the first above-50.0 reading since July 2019. The latest figure pointed to only a marginal improvement in business conditions, suggesting the Egyptian non-oil economy has further scope to recover to the level of performance seen prior to the novel coronavirus (COVID-19) pandemic,” the report said. “Continuing the positive trend over the third quarter, firms saw an additional rise in business activity in September.”
The report added, “The rate of expansion was the quickest since July 2019, although it was only modest overall. Aiding the upturn was a third successive rise in new business at non-oil private sector Egyptian companies.”
The rate of sales growth accelerated to the strongest in over five years, with firms commenting on an increase in market activity as COVID-19-related restrictions were loosened. This took place despite some social distancing measures remaining in place, to help keep figures down.
The reopening supported a rise in new orders and contracts, with export sales also growing sharply. The economic improvement led firms to ease back on job cutting in September. Some firms notably increased hiring due to a rise in new work, which in part offset workforce reductions at other companies, the report noted.
On the purchasing side, companies reported a broadly unchanged level of stocks, thereby ending a nine-month sequence of stock depletion. Some respondents found that successive rises in new orders led them to draw up stocks to support a recovery in output. These measures helped to offset reductions in input buying at other companies.
Meanwhile, lead times were shortened for the third month running. Input price inflation slowed again in September. This was in part due to a stronger Egyptian pound value and reductions in some raw material prices. Nonetheless, the modest rise in input prices led to the quickest increase in output charges for a year.