Cairo – Mubasher: Egypt’s non-oil private sector has witnessed a modest drop in production in June, on the back of a slight retreat in new orders, according to a report compiled by IHS Markit for Emirates NBD PJSC. 

The seasonally adjusted Emirates NBD Egypt Purchasing Managers’ Index (PMI) grew to 49.2 in June from 48.2 in May, marking a softer deterioration in business conditions. A reading above 50 indicates expansion, while a reading below that signals contraction.   

“While still firmly in sub-50.0 contractionary territory, the average of 49.4 over Q2 2019 was the strongest since Q3 last year, and was markedly better than the long-run series average of 48.4,” MENA economist at Emirates NBD, Daniel Richards, commented.

Production and new orders have improved considerably in June, but still marking a decline in economic activity, Richards added. 

“New export orders seemed to weigh down domestic activity, with very few firms registering an uptick in demand,” he noted.

Output prices remained unchanged in June, following two successive months of reductions, while the pace of growth in input prices eased to the second-slowest since April 2011, after the one registered in March.    

“This may prove short-lived, however, given upcoming subsidy reform scheduled for the new fiscal year will likely push energy and fuel prices up once more,” Richards pointed out.

Workforce numbers retreated for the second successive month in June as employees left their jobs for other firms. 

The report highlighted that future output index stayed positive in June despite being lower than in May, expecting a slight improvement in gross domestic product (GDP) growth in 2019.