There were signs of positive growth, as both output and new orders experienced slower declines, with the slowed decline suggesting a potential stabilization. The report also pointed towards easing inflationary pressures
Egypt’s non-oil private sector economy has climbed to a 22-month high, with headline seasonally adjusted Purchasing Managers’ Index (PMI) recording 49.1 in June, marking its highest level since August 2021. However, Egypt’s PMI hovers under the 50.0 threshold which indicates growth.
In its monthly report, S&P noted that the non-oil private sector faced persistent challenges as the second quarter of the year drew to a close, with the PMI once again signaling a deterioration in business conditions.
There were signs of positive growth, as both output and new orders experienced slower declines, with the slowed decline suggesting a potential stabilization. The report also pointed towards easing inflationary pressures.
“At 49.1, the index reached its highest level for almost two years. Behind June's sustained uplift in the PMI were output and new orders, which similarly showed rates of decline softening amid reports from some survey members that demand conditions were beginning to show greenshoots of recovery,” explained Joe Hayes, Principal Economist at S&P Global Market Intelligence.
This modest decline since May suggests. In addition, inflationary pressures eased slightly, remaining far below the peaks witnessed earlier this year in January.
“After the steep price increases seen at the start of the year, fewer companies are reporting such high-cost pressures. The overall rate of input price inflation cooled to a 16-month low during June, which led output charges to rise at a slightly weaker rate,” Hayes added.
Employment levels dipped for the seventh consecutive month in June, reflecting subdued confidence in the year-long outlook. However, it is important to note that the decrease in employment was only marginal.
Surveyed Egyptian non-oil businesses shared a subdued outlook, with the level of optimism among businesses being the second-lowest ever recorded by the PMI report. S&P revealed that growth expectations were only “mildly positive”.
Overall input cost inflation reached a 16-month low, driven by a slower increase in purchase costs. Output prices followed suit, rising at a slower pace compared to May.
Non-oil private businesses scaled back their purchasing activity and reduced their input stocks. However, the rates of decline in both cases were less pronounced compared to May. The continued contraction in output and new business enabled businesses to clear pending orders for the fifth month in a row.
“If key survey indicators such as output and new orders can sustain their upward current trajectory, we may see an improvement in business sentiment in the coming months,” Hayes concluded.