August 5, 2019 / 4:16 AM / 14 days ago

Egypt's non-oil private sector grows for the second time in 2019 -PMI

CAIRO, Aug 5 (Reuters) - Activity in Egypt’s non-oil private sector grew slightly in July, a survey showed on Monday, its first expansion since April and only the second of 2019.

IHS Markit’s Purchasing Managers’ Index (PMI) for the non-oil private sector strengthened to 50.3 in July from 49.2 in June, moving above the 50.0 threshold that separates growth from contraction.

Sub-indices for output and new orders, which account for over half the index’s weighting, also both improved. Stronger activity in July pushed output to 51.0, the second expansion in 20 months, while new orders edged up to 50.4.

“A noticeable factor was an increase in contracts from foreign clients, leading to the first rise in new export orders since August 2018,” IHS Markit economist David Owen said.

“The rise in demand came from a number of countries, signalling that Egyptian businesses are growing in their competitiveness on trade.”

Egypt’s three-year $12 billion loan programme with the International Monetary Fund, the final $2 billion tranche of which was disbursed on July 24, is tied to tough reforms aimed at reviving the economy after years of political turmoil. They have included a currency devaluation, deep cuts to energy subsidies and the introduction of a value-added tax.

“Optimism toward future output growth improved in July. Some firms based their outlook on hopes of a strengthening Egyptian pound in the near-term as the U.S. dollar may fall in value through interest rate cuts,” Owen said.

“Overall, firms are generally positive when regarding the future condition of the economy.”

The Egyptian pound currency has already strengthened nearly 7% against the dollar since the beginning of the year.

Egypt is targeting growth of 6% in fiscal year 2019/2020, which began in July, slightly more than the 5.6% targeted in 2018/2019.

- Detailed PMI data are only available under licence from IHS Markit and customers need to apply for a licence.

To subscribe to the full data, click on the link below: here

For further information, please phone IHS Markit on +800 6275 4800 or email economics@ihsmarkit.com (Reporting by Nadine Awadalla; Editing by Catherine Evans)

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