Egypt’s Non-Oil Economy Contracts for Fourth Month, Survey Shows

Egypt’s non-oil private industries contracted for the fourth month in a row though the pace of deterioration slowed amid signs of improved demand, a survey released on Tuesday showed.

The HSBC Purchasing Managers’ Index for the whole economy rose to 49.8 from 49.6 in March. Readings above 50 signal expansion while those below indicate contraction. Egypt’s index has stayed below 50 since the start of the year.

“Business conditions in Egypt’s non-oil private sector economy worsened for the fourth month running in April, driven by an ongoing decline in employment.” said Philip Leake, an economist at Markit Economics. “However,with output and new orders growing simultaneously again, it may not be long before the PMI breaches 50.”

The Egyptian government expects economic growth to slow in the second half of the fiscal year through June. Gross domestic product expanded 5.6 percent in the first six months largely due to sluggish growth in the comparable period.

Egypt’s benchmark EGX 30 Index for stocks has declined 3 percent this year after surging more than 30 percent in 2014.

EFG-Hermes, Egypt’s largest investment bank, said on April 29 that growth in the three months ending in March was “weak” due to a slowdown in tourism, cold weather and shortage in foreign currency. It cut its growth estimate for the quarter by half a percentage point to 3 percent.

The PMI measure is based on answers to a questionare from purchasing executives in about 350 private sector companies. It carries five sub-indexes measuring key indicators including output, new orders and employment.

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