CAIRO: Business conditions in Egypt’s non-oil private sector extended a negative performance for a third consecutive month at March-end hurt by slashing output and employment, while new orders barely grow in the same period, HSBC announced in a survey released Sunday.
As the Egyptian pound continued to depreciate against the US dollar, overall input costs saw a sharp rise in March, said HSBC.
The HSBC Egypt Purchasing Managers Index (PMI) hit 49.6 points in March, up from a 17-month low of 46.8 at February-end, but remains below neutral 50.0 thresholds, continuing the trend observed since the beginning of quarter one of 2015.
In December, the index recorded 51.4 points. Readings above 50.0 reflect an improvement in business conditions, while a breach below this level marks a deteriorating business.
Accordingly, the average for the first quarter of 2015 (48.6) was the weakest since Q3 2013, according to the survey.
“Subdued growth of new business was mirrored by a marginal expansion in purchasing activity in March. In contrast, pre-production inventories fell at the fastest rate in more than a year-and-a-half,” the report read.
Commenting on the survey, Philip Leake, an Economist at Markit said, “Egypt’s non-oil private sector remained in contraction territory in March,” citing subdued demand conditions which resulted in further decline in output and employment during the month.
He added that the weaker currency extended its pressure on input costs, giving an “uncertain” outlook for Egypt as the depreciating pound provides “a key source of instability.”