(AFP Photo)
Egypt’s non-oil producing private sector companies witnessed declines in both outputs and new orders in January, according to HSBC’s Purchasing Manger’s Index (PMI). Headline PMI registered 48.7 in January, down from 52 in December and 52.5 in November.
The decline underscores the long and difficult road Egypt faces to economic recovery, said Simon Williams, HSBC’s chief economist for the Middle East.
“The readings for output, orders and employment are weak and appear particularly troubling given the low base,” Williams said. “Confidence will remain fragile until security has improved and the political outlook has cleared.”
In the PMI report, which is based on a survey of 350 private sector companies in manufacturing, services, construction and retail, 27% of interviewees attributed the performance deterioration to renewed political instability in the country.
Although the number of workers continued to decrease in January due to the decreased domestic demand, the rate of job loss was the lowest in seven months.
Meanwhile, new business demand from abroad increased for the third straight month.
The cost pressures continued in January, with 25% of the respondents recording higher input costs in January, according to the report. The survey respondents stated that exchange rates were unfavourable and that prices of raw materials have increased.
“Purchasing activity at Egypt’s non-oil producing private sector firms declined for the first time in three months during January, in part reflecting a reduction of total new business,” the report read.
In its December report, the bank reported private companies saw a solid rise in activities. The positive performance was attributed to client demands from foreign markets.
