Egypt's business conditions worsen

View of Cairo by the River Nile in Egypt

Egypt's non-oil private sector's business conditions worsened for the third straight month in December, having improved on average in the third quarter, according to a latest survey results revealed on Sunday.
The downturn moderated since November, however, with rates of contraction in output, new orders and employment all easing. There were reports that security concerns had dampened client demand, particularly from abroad as exports dropped sharply again.
Meanwhile, currency weakness relative to the US dollar remained a theme in the latest period, and it contributed to another marked rise in purchasing costs. Despite this, efforts to attract new clients meant that charges fell for the third time in four months.
The survey, sponsored by Emirates NBD and produced by Markit, contains original data collected from a monthly survey of business conditions in the Egyptian private sector.
Commenting on the Emirates NBD Egypt PMI, Tim Fox, chief economist at Emirates NBD, said: "The recovery in the December PMI data is encouraging, and suggests that the weak November survey was at least partly due to temporary factors, impacting tourism and external demand. As such it does not alter our view that the Egyptian economy will expand 4.2 per cent year on year in FY2015/16."
Key findings say the country's non-oil private sector downturn eases as PMI moves closer to 50.0 mark. Its output, new orders and employment all drop at slower rates as security worries continue to hamper exports.
The headline seasonally adjusted Emirates NBD Egypt Purchasing Managers' Index (PMI) - a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy - posted 48.2 in December, up from November's recent low of 45.0.
The latest sub-50.0 reading was the third in succession, and meant that the average for the fourth quarter as a whole (46.8) was the lowest since the thrid quarter of 2013. However, the index pointed to only a modest rate of contraction overall in December.
In line with the trend in business conditions, output and new business fell simultaneously for the third consecutive month. That said, the respective rates of decline eased since November, with some new contract wins reportedly helping to support fragile demand. Lower new work was often blamed on issues surrounding security, and data highlighted the subsequent effect on exports. New business from abroad dropped sharply, with foreign clients especially cautious in the aftermath of the Russian air disaster.
The lack of growth in total new work meant that panellists were cautious with regard to their purchasing activity in December.
- abdulbasit@khaleejtimes.com