Mubasher TV
Contact Us Advertising   العربية

Egypt non-oil private sector growth moderates in Sept

Egypt non-oil private sector growth moderates in Sept
Photo Credit: Arabianeye-Reuters

Cairo - Mubasher: Growth of Egypt’s non-oil private sector was sustained in September, albeit at a weaker pace, according to Emirates NBD Egypt PMI report.

The latest improvement in business conditions was fractional, reflective of slower expansions in both output and new business, the report showed.

A further reduction in employment also contributed to the slowdown. Meanwhile, input buying stagnated, having risen solidly during August.

On the price front, data indicated a first reduction in output charges since May, while currency depreciation (particularly against the US dollar) led to another sharp rise in firms’ purchase prices.

At 50.2 , Index™ (PMI) – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – was indicative of only a slight improvement in business conditions during September.

Despite falling from August’s eight-month high (51.2), the latest reading was in line with the average over Q3 as a whole (50.2). Moreover, the quarterly trend was the highest so far in 2015, with September being only the third month since the turn of the year in which growth has been observed.

Data indicated that the overall slowdown was partly driven by an easing in output growth during September. The rate of expansion was nevertheless the third-quickest in a year.

Panellists suggested that higher activity was the result of improving client demand – a view that was reinforced by the respective index for new work posting above the 50.0 mark.

New orders rose for the second straight month, although the rate of growth slowed amid reports of political and economic instability. A lack of stability was also reported in a number of key international markets, leading to a further reduction in new export work. Non-oil private sector employment in Egypt continued to decline in September, marking a four month period of job losses. The rate of contraction was the fastest since April, albeit modest overall. Backlogs of work also decreased, having risen in each of the previous four months. Some respondents commented on greater operational efficiency stemming from investment in machinery.

Meanwhile, purchasing activity stagnated in September, following the strongest rise in nearly a year in August. Subsequently, stocks of purchased items fell more quickly, with companies able to fulfill incoming orders by drawing on existing stocks.

The rate of input cost inflation remained sharp in September, with data pointing to higher purchase prices as the key contributing factor. The weakness of the Egyptian pound versus the US dollar was often cited as the main reason behind the rise in purchasing costs. In contrast, average tariffs declined at the end of Q3. According to anecdotal evidence, some firms decided to offer discounts in an effort to attract new clients.