Survey: Business conditions worsen for 9th consecutive month

With output, new orders and inflation continuing to decline in June, businesses surveyed for the Purchasing Managers' Index (PMI) reported that conditions in Egypt’s non-oil sector deteriorated during the month. June marks the ninth consecutive month that the PMI has indicated a decline.

At 47.5, the June index score marked a marginal decline from the 47.6 rating recorded in May. Any score below 50 indicates that business conditions worsened.

Client demand dropped both domestically and abroad, contributing to the drop in output and new work, survey respondents said. The downturn in tourism hit businesses hard, as did uncertainty about the exchange rate, which suppressed the demand for export goods.

Inflation also played a role, with purchasing costs for businesses rising at the fastest rate since the Egypt survey began in 2011.

“June’s survey suggests the Egyptian economy continued to slow at the end of fiscal year 2015/16, with the tourism sector appearing particularly weak. As we start the new fiscal year in July, hopes for a stronger  recovery  will  depend  in  large  part  on whether  a  solution  to  the ongoing  FX  liquidity crunch can be found in the near term,” said Jean-Paul Pigat, senior economist at survey-sponsor Emirates NBD, in a press statement.

With business down, firms reported staff cuts for the 13th month in a row. With fewer employees, delays at customs and raw material shortages, backlogs of work rose despite the overall decline in business.