Decline in Egypt's business conditions in July - PMI

Tuesday 04-08-2015 12:38 PM
Decline in Egypt's business conditions in July - PMI

Customers and security guards stand in front of a branch of the CIB Bank in Cairo January 31, 2010. REUTERS/Tarek Mostafa

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CAIRO, Aug 4 (Aswat Masriya) - Egypt's non-oil private sector witnessed a decline in July, as output, new orders and employment dropped, according to a survey released on Tuesday.

The survey, sponsored by Emirates NBD and produced by Markit, noted a marginal increase in charges due to the continuous rise in input costs.

The Emirates NBD Egypt Purchasing Managers' Index stood at 49.2 in July, slipping below the neutral 50 mark. The PMI had reached its highest point in 2015 in June, standing at 50.2.

"The drop in July's survey came in below expectations, and hence raises the possibility that Egypt's macroeconomic recovery may have stalled at the start of FY2015/16," said Jean-Paul Pigat, Senior Economist at Emirates NBD in a press release announcing the survey results. 

Pigat said growth momentum could accelerate in the second half of the year should security risks and foreign exchange liquidity shortages improve.

The survey cited "dampened demand" due to security concerns, saying that this resulted in firms reducing production.

A remote explosion targeted the motorcade of Egypt's top prosecutor in late June, leaving him dead due to his wound. He became the first top official to be assassinated since the military ouster of Islamist president Mohamed Mursi in July 2013, following mass protests against his rule.

Two days later, Islamic State-affiliated militants carried out a string of simaltaneous attacks on a number of security checkpoints and a police station in a town in North Sinai, in a failed attempt to take over it.

The survey also cited the Egyptian pound's weakness as a reason for a "sharp rise" in input prices.

The pound dipped by 20 piastres in July, with the central bank depreciating it twice in less than a week, to stand at  7.73 pounds to the dollar.

Egypt's annual inflation rate stood at 11.5 percent in June, declining from the 13.5 percent it recorded in May, the state's official statistics agency reported.

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