Egypt's non-oil private sector expands for first time in two years as PMI Index turns positive

Ahram Online , Tuesday 5 Dec 2017

The Emirates NBD PMI Index rose to 50.7 in November from 48.4 in October

Egypt's non-oil private sector has expanded for the first time in 25 months, as indicated by Emirates NBD Egypt Purchasing Managers' Index, which turned positive in November, according to the index that came out on Tuesday.

The PMI Index rose to 50.7 in November from 48.4 in October, marking the first time it rose above the 50.0 neutral level since September 2015. An index above 50 means growth and below 50 shows a contraction.

"This suggests that the wide-ranging economic reforms embarked upon in November 2016 as part of an IMF-sponsored programme are beginning to bear fruit, and that the outlook for the Egyptian economy is starting to improve," Khatija Haque, head of MENA Research at Emirates NBD, said on Tuesday. 

New orders from abroad also grew at the fastest pace on record, driven by the competitiveness of the EGP after the government floated the currency in November of last year.

As for output prices, November saw the lowest reading since February, as strong competition limited firms' power to hike prices.

According to Haque, "16.4 percent of firms saw higher imports from overseas, reportedly due to increased demand from neighbouring economies, while no firms signalled a drop in overseas demand."

In addition, employment fell for the 30th consecutive month.

A majority of surveyed firms have a positive view of where economic conditions in Egypt are going, as 68.7 percent of firms expect a higher output after a year.

"Strong sentiment towards future prospects chimes with our view that the Egyptian economy will continue to strengthen over the coming quarters," Haque wrote.

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