Egypt exports grow during August

Business Bureau, Gulf Today

Business sentiment around future activity soared to the highest in one-and-a-half years in August, as more Egyptian firms expressed optimism for growth.

Nevertheless, present operating conditions were subdued, mainly due to mild declines in output and new orders. Output and new orders drop slightly in August, but exports grow further.

Employment levels rise for first time in four months. Employment improved for the first time since April, but backlogs grew amid issues with liquidity.

Input cost inflation meanwhile ticked up as pressure from higher fuel prices persisted.

As such, firms raised selling charges at the fastest rate in a year.  The headline seasonally adjusted IHS Markit Egypt Purchasing Managers’ Index (PMI) - a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy — fell from 50.3 in July to 49.4 in August, signalling a slight worsening in the health of the sector. It was the tenth deterioration in 12 months, but one that was among the softest seen in this period. Output levels declined over August, after a slight expansion in July.

Lower activity was largely linked to weaker sales, with many firms commenting on the impact of poor labour market conditions in the economy.

On the flip side, new export orders increased for the second month in a row. Firms noted an improved picture in the external market, as contracts from trading partners in the Middle East and other regions increased. This indicated that the fall in total sales was driven by weakness in domestic demand.

Despite difficult conditions at Egyptian non-oil companies, the outlook for future activity continued to improve. The level of sentiment among surveyed firms was the strongest for one-and-Strongest expectations since February 2018.