File Photo: Egyptian garment factory. REUTERS
Egypt’s purchasing managers’ index (PMI) in the non-oil private sector dropped in March for the first time in three months from 49.3 in February to 48.0, signalling a modest deterioration in the health of the sector’s performance, according to the IHS report released on Monday.
IHS’s March survey data signalled a faster decline in the Egypt's non-oil private sector’s operating conditions, as new business fell for the fourth straight month and output decreased at the sharpest rate since June.
Egypt’s PMI in March marked the lowest reading since June 2020 and pointed to the quickest downturn since the onset of the COVID-19 pandemic in 2019, according to the report.
The report attributed the decline to faster reductions in output and new business at the end of the first quarter of 2021, adding that Egyptian businesses saw a solid fall in activity that was the most marked for nine months.
Moreover, new business inflows declined at the joint-quickest rate in that same period, according to the report.
“Nearly 12 percent of survey respondents saw a fall in new work from February, often attributing this to weak market demand and ongoing COVID-19 restrictions. Meanwhile, export sales were down for the first time in three months, albeit following a survey-record upturn,” the report illustrated.
The drop in sales allowed firms to work on backlogs during March, which fell for the third month in a row, according to the report.
Furthermore, softer capacity pressures contributed to a reduction in workforces, extending the run of job losses to almost a year-and-a-half.
The report also said that purchasing activity in the non-oil sector fell markedly, with respondents mentioning that a drop in new business inflows and previous overstocking led to weaker demand for inputs.
“Stocks of purchased items decreased modestly, while firms experienced the worst delay to input deliveries since last June. Inflationary pressures were again recorded in the March data, led by a solid increase in purchasing costs, as a number of raw materials were marked up in price,” according to the report.
The report expected a strong economic recovery for Egypt by the end of 2021 owing to the accelerated national vaccine rollout.