Survey: Business activity down for 8th month in a row

Conditions for Egypt’s non-oil private sector worsened for the eight month in a row in May, according to businesses surveyed for the Purchasing Managers Index. 

The continuing fall of the Egyptian pound against the dollar was a major factor in the decline, raising costs and contributing to a liquidity shortage that dampened business activity, respondents reported. Purchase prices rose at the steepest rate since the Egypt survey began in 2011.

At 47.6, May’s overall index score improved slightly from the 46.9 reading in April, indicating that conditions deteriorated at a slower rate. Any score below 50 indicates that the business environment got worse during the month. 

“It’s definitely encouraging to see signs that the downturn has started to ease, as tentative as those indications may be. But the survey also continues to point to fundamentally weak demand conditions across the economy, which in light of the ongoing FX shortage, is likely to persist as we head into the start of FY2016/17,” Jean-Paul Pigat, Senior Economist at survey-sponsor Emirates NBD said in a Sunday press statement.

Both output and new business fell during the month, albeit at a slower pace than the record drop recorded in March. A decrease in exports was partly responsible for the decline in new work.

Employee numbers decreased for the 12th consecutive month. Combined with a lack of liquidity, low employment led to a record growth in backlog for businesses surveyed.