Egypt's non-oil business suffers, but exports rise

Business conditions in Egypt's non-oil private sector deteriorated in May, as has been the case throughout the past 20 months, a new survey has found.

The latest downturn was evident by marked reductions in output and new orders, though the respective rates of contraction eased to the second weakest in nine months, behind April.

Non-oil Egyptian firms registered a survey-record rise in new export orders, as international demand strengthened. On the price front, currency weakness continued to place further pressure on input costs, leading to another substantial rise in output charges.

The survey focuses on the headline seasonally adjusted Emirates NBD Egypt Purchasing Managers' Index (PMI). At 47.3 in May, the PMI was broadly unchanged from April's nine-month high of 47.4.

Respondents cited lower demand and unfavourable economic conditions. In contrast, new exports rose at the fastest pace since the inception of the series in April 2011.

Panellists linked the rise in new export work to increased demand from international markets. The rate of inflation eased to the weakest in 15 months. Firms remained strongly optimistic towards the 12-month outlook.

"Egypt's private sector appears to be stabilising, with the PMI largely unchanged from April. Encouragingly, new exports orders rose at the fastest rate on record in May, suggesting that the sharp devaluation of the pound in November is having a positive impact on exports," said Khatija Haque, head of Mena research at Emirates NBD.

Source: Khaleej Times