New financial data in Egypt has shown that output, new orders and employment all declined at a slower rate in October, indicating that the Egyptian non-oil private sector downturn eased.
The data took into consideration that both input and output price inflation softened, according to Purchasing Managers' Index (PMI) of Emirates NBD and IHS Markit.
Business confidence hit a 26-month high, signaling strong optimism towards future growth prospects, with many expecting economic stability over the coming year.
Commenting on the Egypt PMI survey, Khatija Haque, head of MENA Research at Emirates NBD, said: “The headline PMI for Egypt improved in October, although it remains under the neutral 50 level. Output, new orders and employment declined at a slower rate in October compared with September. New export orders increased on average last month, after declining in September. Encouragingly, business optimism in October was the highest in more than two years.”
The most recent survey indicated that output continued to decline in the Egyptian non-oil private sector, albeit at a slower pace than in September.
Panelists reported a further moderate contraction in new orders. Meanwhile, foreign demand for Egyptian products returned to growth in October. According to anecdotal evidence, weak sales in the domestic market were partly negated by an uptick in export demand from neighboring economies in the Middle East.
On the price front, October’s survey recorded a down-tick in both input and output price inflation.
That said, average cost burdens faced by Egyptian non-oil private sector firms continued to rise sharply. Data suggested that input cost inflation was primarily driven by higher raw material costs, whilst staff costs rose at a slower, albeit solid pace.
Job shedding among Egyptian non-oil private sector companies continued in October, thereby extending the current sequence of contraction to 29 months.
Firms commonly linked longer wait times with a lack of capacity at suppliers. Buying activity returned to growth in October, ending a four-month streak of contraction.