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Emirates NBD Egypt PMI: Output price inflation eases to ten-month low
Source: ASDA'A BCW for Emirates NBD , Author: Posted by BI-ME staff
Posted: Wed November 7, 2018 3:25 pm

EGYPT. Today sees the release of October data from the Emirates NBD Purchasing Managers’ Index™ (PMI™) for Egypt. The survey, sponsored by Emirates NBD and produced by IHS Markit, contains original data collected from a monthly survey of business conditions in the Egyptian private sector.

Commenting on the Egypt PMI™ survey, Daniel Richards, MENA Economist at Emirates NBD, said: “The Emirates NBD Purchasing Managers’ Index (PMI) for Egypt fell modestly to 48.6 in October, compared to 48.7 in September. This is the second consecutive month of contraction for the index after having enjoyed a brief period in expansionary 50-plus territory in July and August. It is also the lowest reading of 2018, and the data suggests that private sector firms remain under pressure as Egypt’s IMF-sponsored economic reform programme continues. That being said, the reading is still far higher than those seen at the start of the process in November 2016, and future expectations remain robust.”
 
The main findings of the October survey were as follows:
• Softer falls in output and new orders in October
• Inflationary pressures ease
• Purchasing activity rebounds after fall in September

The 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 – fell fractionally from 48.7 in September to 48.6 in October. The latest reading indicated a slightly quicker, but still modest, deterioration in business conditions at Egyptian non-oil private sector companies.

The sustained downturn reflected another decline in new orders during October. That said, the rate of decline was less marked than in September. Panellists frequently mentioned that challenging market conditions led to the drop in new orders. Foreign demand also fell, albeit at a marginal rate.

Similarly, business activity contracted across Egypt’s non-oil private sector in October. This marked the second successive month where output decreased, with respondents citing a lack of market demand.

As such, employment levels dropped during October. The rate of job shedding was the fastest since March and partly attributed to a number of employees leaving for new positions. At the same time, backlogs of work grew for the fourth successive month, albeit marginally.

On the price front, firms increased their output charges at the weakest rate in ten months. This was linked to a softer rate of input price inflation, although many still observed a rise in raw material costs, gasoline prices and staff wages.

Despite the decline in output, businesses increased purchasing activity in October. This followed a modest drop in September. However, falling production levels and order book volumes meant that input stocks also rose. Meanwhile, supplier delivery times shortened for the first time in seven months.

Looking ahead, Egyptian non-oil private sector firms remained confident that output would rise over the coming year. Almost one-third of businesses expected activity to expand, with some forecasting increases in contracts and investment over the next 12 months.

Photo Caption: Daniel Richards, MENA Economist at Emirates NBD

About The Emirates NBD Egypt Purchasing Managers’ Index
The Emirates NBD Egypt Purchasing Managers’ Index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 450 private sector companies, which have been carefully selected to accurately represent the true structure of the Egyptian non-oil economy, including manufacturing, services, construction and retail. The panel is stratified by Standard Industrial Classification (SIC) group, based on industry contribution to GDP.

Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month. For each of the indicators the ‘Report’ shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the ‘diffusion’ index. This index is the sum of the positive responses plus a half of those responding ‘the same’.

The Purchasing Managers’ Index™ (PMI™) is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers’ Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction.

Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change. An index reading above 50 indicates an overall increase in that variable, below 50 an overall decrease. IHS Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

About Emirates NBD
Emirates NBD is a leading banking Group in the region. As at 30th June 2018, total assets were AED 477.5 Billion, (equivalent to approx. USD 130 Billion). The Group has a significant retail banking franchise in the UAE and is a key participant in the global digital banking industry, with over 90 per cent of all financial transactions and requests conducted outside of its branches. The bank was declared the Most Innovative Financial Services Organization of the Year at the 2017 BAI Global Innovation Awards.

The bank currently has 227 branches and 1065 ATMs and SDMs in the UAE and overseas and a large social media following, being the only bank in the Middle East ranked among the top 20 in the ‘Power 100 Social Media Rankings’, compiled by The Financial Brand. It is a major player in the UAE corporate and retail banking arena and has strong Islamic Banking, Global Markets & Treasury, Investment Banking, Private Banking, Asset Management and Brokerage operations.

The Group has operations in the UAE, the Kingdom of Saudi Arabia, Egypt, India, Singapore, the United Kingdom and representative offices in China and Indonesia.
The Group is an active participant and supporter of the UAE’s main development and community initiatives, in close alignment with the UAE government’s strategies, including financial literacy and advocacy for inclusion of People with Disabilities under its #TogetherLimitless platform. Emirates NBD Group is an Official Premier Partner of Expo 2020 Dubai. For more information, please visit: www.emiratesnbd.com

About IHS Markit (www.ihsmarkit.com)
IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions.

IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.

 

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