{"id":564859,"date":"2021-03-03T14:54:12","date_gmt":"2021-03-03T14:54:12","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2021\/03\/03\/new-foreign-business-supports-egypts-private-sector-still-in-contraction-territory\/"},"modified":"2021-03-03T14:54:12","modified_gmt":"2021-03-03T14:54:12","slug":"new-foreign-business-supports-egypts-private-sector-still-in-contraction-territory","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2021\/03\/03\/new-foreign-business-supports-egypts-private-sector-still-in-contraction-territory\/","title":{"rendered":"New foreign business supports Egypt\u2019s private sector, still in \u201ccontraction\u201d territory"},"content":{"rendered":"

<\/a> Non-oil private sector conditions worsened for the third consecutive month in February,<\/strong> but at a milder rate than the past two months<\/strong> as new exports supported demand, according to IHS Markit\u2019s monthly survey of businesses. The purchasing managers\u2019 index (PMI) gauge rose slightly to 49.3 in February from 48.7 the month before<\/a>. The gauge remained below the 50.0 mark which separates expansion from contraction.<\/p>\n

New foreign business grew at its sharpest in nearly 10 years, <\/strong>helped by \u201ca strong upturn in export demand.\u201d The \u201cupside\u201d made February the slowest month of decline since a dip first seen in December due to the resurgence in covid-19 cases. Businesses said they got into more new contracts and witnessed a \u201cslight\u201d improvement in tourism activity last month.<\/p>\n

The pace of overall output contraction was only \u201cmodest,\u201d<\/strong> and reflects what could shape up into a recovery as we head further into the year. The same applies to new sales, which dropped at a \u201cless marked\u201d rate compared to January.<\/p>\n

\u201cDemand trends have moved closer to stabilisation,<\/strong> particularly as export sales picked up at a record pace \u2026 Further growth in exports should help improve overall sales \u2026 as the impact of the covid-19 pandemic subsides,\u201d said IHS Markit economist David Owen.<\/p>\n

On the downside, firms are less optimistic about the next 12 months, <\/strong>with some citing the risk of permanently going out of business \u201cdue to the steep economic downturn caused by the pandemic.\u201d Only 29% forecast growth this year, down from 40% last time around. Some responses \u201csuggested that some businesses may fail before the economy makes a full recovery,\" Owen said.<\/p>\n

Input purchases continued to drop on the back of the fall in output and new orders, <\/strong>and businesses drew from existing stock, but only \u201cmarginally.\u201d Renewed pressure on inventories first appeared in January, when firms held back purchases at the sharpest pace in four years.<\/p>\n

Most are citing growing input cost inflation, <\/strong>but at a rate that was the weakest since September 2020. This was led by metal commodities, primarily iron and steel. Some of it passed down to clients, yet \u201conly fractionally overall.\u201d<\/p>\n

Want to know why input costs are rising? <\/strong>Head back to yesterday\u2019s PM edition<\/a> for our take on where Egypt stands as commodity prices continue to surge globally, giving way to talks of a potential \u201csupercycle.\u201d<\/p>\n

Meanwhile, the employment gauge fell at its slowest rate in 16 months, <\/strong>IHS Markit said. This came as some firms continued to step up hiring due to an increased workload.<\/p>\n

Read the report: <\/strong>Tap\/click here (pdf)<\/a> for the press release with more on the main findings.<\/p>\n

Elsewhere in PMI land:<\/strong><\/p>\n