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Egyptian non-oil firms saw solid improvements

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Staff writer ▼ | July 4, 2014
Companies in the Egyptian non-oil producing private sector observed solid improvements in output, new orders and new exports in June.
Egypt street market
Egypt street marketCompanies in the Egyptian non-oil producing private sector observed solid improvements in output, new orders and new exports in June.

Meanwhile, companies continued to shed staff, albeit at the slowest pace in the current sequence of decline. Firms lowered their selling prices for the second month in succession, while the pace of input cost inflation quickened.

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

The seasonally adjusted headline index rose from 48.7 in May to a six-month high of 51.5, signalling an improvement in operating conditions at Egypt's non-oil producing private sector companies. Business conditions strengthened for the first time since December.

Activity in Egypt's non-oil producing private sector rose for the first time in three months in June, with nearly 21% of survey respondents reporting expansion. The pace of growth was the quickest so far this year. New orders and new export business both rose when compared with the previous month, with surveyed firms commenting on improved political stability and an increased level of client demand.

The level of work-in-hand fell fractionally during June, with just over 99% of respondents signalling no change in the level of work outstanding. There was a further lengthening of supplier delivery times in the Egyptian non-oil private sector. The latest deterioration in vendor performance was the weakest since December last year, however, and was only marginal overall.

Companies continued to shed staff in June, extending the sequence of workforce reduction to 26 months. The pace of decline was the slowest in this period, however, and minimal overall. Firms that reported an increase did so in relation to rising demand, while those that signalled a further decline attributed this to employees retiring or seeking alternative employment.

In terms of prices, input cost inflation continued during June and accelerated from the previous month. Purchase prices and staff costs both grew at a quicker pace. Meanwhile, Egyptian non-oil private sector firms continued to reduce their selling prices in an attempt to attract new customers.

Finally, purchasing activity accumulated at the fastest pace in the survey's history during June and stocks of purchases increased for the first time since January. The expansion in input stocks was attributed by panellists to greater demand within the economy.