Egypt's export orders rebound in May

The highlight of the May Emirates NBD PMI survey for Egypt was the rebound in new export orders.  This index rose to 54.8 from 51.0 in April, the highest reading since the survey began in 2011.  The data suggests that the devaluation of the pound last November is finally having a positive impact on external demand and export growth.   

The headline PMI was broadly unchanged at 47.3 in May from April’s 9-month high of 47.4, signalling a modest contraction in the non-oil private sector.  Output, new orders and employment declined at a slightly faster rate in May, but this was offset by a more modest decline in inventories and longer suppliers’ delivery times.    

On the inflation front, the impact of November’s devaluation continues to wane.  While input costs rose sharply in May (64.3), the rate of growth in input costs was the weakest since February 2016.  Output (selling) price inflation was relatively modest with this index at 53.7 in May, broadly unchanged from 53.8 in April and well below the 71.2 recorded in January 2017.  This too suggests that inflationary pressures are easing.

There are other signs of stabilisation in the PMI survey data: the backlogs of work rose at the fastest rate in 10 months, staff costs increased at a slower rate in May relative to April, and firms remain very optimistic about the prospects for growth in the coming twelve months, even as the ‘future output’ index eased somewhat to 74.7 in May from 77.2 in April.  

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