FILE PHOTO: The Egyptian Exchange bell is seen at the stock exchange in Cairo, Egypt September 23, 2019. REUTERS
Non-oil private economic activity in Egypt contracted at the quickest rate in almost three years in January as sales and new export orders slumped, a survey showed on Tuesday.
The IHS Markit Egypt Purchasing Managers’ Index (PMI) for the non-oil private sector slid to 46.0 in January from 48.2 in December, well below the 50.0 threshold that separates growth from contraction.
“Firms squarely linked this to falling sales, with customers increasingly cautious about their expenditure and new contracts dwindling,” IHS Markit economist David Owen said. “This led to softer output, reduced employment and a marked drop in overall purchases.”
The January reading was the worst since the months immediately following a November 2016 IMF-backed economic reform plan that included a halving of the value of Egypt’s currency, a sharp increase in fuel prices and the imposition of a 13% value-added tax.
It was also the sixth consecutive month of decline for private non-oil business activity. Activity has expanded in only six of the last 54 months, according to the PMI.
The January survey said output at Egyptian firms contracted sharply, as did new orders.
“Employment and purchases were also down solidly, leading to only a slight uptick in input costs and driving firms to offer discounts for the third month in a row,” the survey said.
Export orders received by the non-oil companies shrank for a fourth successive month, with the index registering 38.5, its lowest reading in three and a half years.
“Softer trade conditions reportedly led to less foreign contracts,” the survey said. “Moreover, the latest decline was steep and the fastest observed since October 2016.”