Egypt’s non-oil private sector activity collapsed in April affected by a shutdown in the tourism industry, weakening demand and the imposition of a curfew to curb the spread of the new coronavirus pandemic, according to a new survey.
IHS Markit’s Purchasing Managers’ Index (PMI) for the non-oil private sector came in at 29.7 in April, down from 44.2 in March, far below the 50.0 threshold that separates growth from contraction. This is the lowest reading since the survey began nine years ago.
“The reading signalled a severe decline in business conditions,” IHS Markit said in its survey on Tuesday.
The pandemic drove firms to put in place large cost-saving measures, including labour reductions, and led some to close altogether, IHS Markit added.
The novel coronavirus’s spread virtually shut down Egyptian tourism, it said. The last scheduled airline flights to Egypt’s airports ended on March 19.
The country also shut down restaurants, coffee shops, and hotels, in addition to placing a night curfew from 9:00 pm to 6:00 am.
“Businesses lucky enough to remain open scaled back activity on a massive scale, as many highlighted sharp falls in domestic sales and foreign demand,” said IHS Markit economist David Owen in a statement.
The new orders subindex dove to 14.1 in April from 40.2 in March, the worst reading in the last nine years. Purchasing also plunged to 21.0 in April from 39.5 in March as companies drew down inventories in the face of uncertain demand.
The contraction in staffing, however, the survey said it remained relatively subdued, with the employment subindex moving down to 46.1 from 47.0.
“Business expectations remain strong though, in fact improving since March, which may suggest firms will look to retain workforces for when the economy reopens,” Owen added.