PMI signals overall improvement in Egyptian non-oil private sector
Staff Writer |
The seasonally adjusted IHS Markit Emirates NBD Egypt Purchasing Managers’ Index (PMI) – a composite indicator designed to give an accurate overview of operating conditions in the non-oil private sector economy – increased from 49.4 in June to 50.3 during July, signalling an improvement in the overall health of the non-oil private sector.
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Though indicating only a marginal strengthening in business conditions, the headline figure hit an eight-month high as new orders entered expansion territory.
For the first time in three months, firms operating in the non-oil private sector reported greater volumes of new business amid stronger demand from both domestic and foreign sources.
According to panel members, improvements in inbound tourism supported the upturn in domestic new orders, while a strong global economic environment underpinned the expansion in new exports.
On a less positive note, shortages of raw materials and higher costs weighed on business activity, causing output to contract for the third month running.
Moreover, staffing levels continued to fall despite the rise in new orders.
However, both output and employment fell at marginal and slower rates than in June.
Egyptian non-oil private sector firms continued to lower their purchasing activity, with panel members mentioning a lack of liquidity as a key factor behind the reduction.
Consequently, stocks of purchases declined further in July, though at a softer pace than in the previous month.
Alongside the decline in buying levels, stronger demand led firms to utilise stocks.
Meanwhile, non-oil private sector firms experienced a sharp increase in input costs at the start of the third quarter.
Higher fuel costs and energy prices were overwhelmingly blamed for the marked rise in cost burdens, though greater living costs drove up pay inflation.
Accordingly, selling prices were raised further, with the rate of inflation hitting an 11-month high.
Expectations towards output growth over the coming 12 months remained positive in July.
A strong global economic picture alongside the rebound in tourism underpinned positive sentiment.
However, the degree of optimism softened from June. ■
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