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Egypt’s PMI records the lowest reading since last June

Egypt's PMI

Egypt’s Purchasing Managers’ Index (PMI) recorded its lowest reading since June of 2020, in an indication of a slight decline in the country’s economic conditions, according to a report for IHS Markit.

IHS Markit said that the PMI in Egypt decreased to 47.7 points by the end of April of this year.

The index scored 48 points in the month of March, in a number we have not seen in 10 months.

Egypt’s PMI

Operating conditions in the Egyptian non-oil economy deteriorated again in April, according to the latest PMI survey data, as firms reported solid falls in output, new orders and employment, IHS Markit said.

Increases in global raw material prices led to a spike in purchasing costs, with the rate of inflation accelerating to the quickest since September 2019 and driving a faster rise in output prices, IHS Markit added.

The production index, which is one of the main components of the PMI, indicates a fifth consecutive month of decline in business activity during the month of April, coinciding with a further decline in new business flows.

“Firms generally reported that weaker market conditions led to a drop in client demand,” IHS Markit said. “The pace of decline in output was broadly unchanged from March’s nine-month record, with a similar trend seen for new orders.”

Export orders

On the other hand, the level of new export orders received by Egyptian companies increased strongly during April, which was linked by the committee members to the improvement in activity in foreign markets.

Looking to the future, companies’ expectations of future production declined significantly in April, after rising up at the end of the first quarter in the wake of the acceleration of the launch of the Coronavirus vaccine.

The recent spike in domestic infections and concerns about liquidity have led to a decline in the number of companies optimistic about rising production over the next 12 months.

Commenting on the latest survey results, David Owen, Economist at IHS Markit, said:

“Business activity in the Egyptian non-oil sector was further dampened by weak client orders in April, marking a fifth consecutive month of decline and leading to an additional cut to employment numbers.”

“Moreover, price pressures began to accelerate as input costs rose at the quickest rate for 19 months, driven by supply shortages and rising global prices. The uptick contributed to further downward pressure on input purchases, while stocks were depleted for the fourth month in a row.”

Keep reading: Egypt’s Annual Inflation Rate Rises To 4.8% On An Annual Basis

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