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Egypt’s non-oil private sector economy expanded in August as businesses raised their output levels for the first time in exactly three years, a new business survey revealed on Tuesday.
The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ Index (PMI) rose from 49.7 in July to 50.4, a significant expansion over the neutral threshold of 50.0, and marking the first improvement in the health of the non-oil private sector since November 2020.
Four out of the five sub-components positively influenced the headline index in August, including renewed rises in output and stocks of purchases. New orders was the only negative factor, although firms reported only a marginal drop overall, the report said.
Despite new orders softening slightly for the second month running, there were reports of a demand recovery. Companies also expanded their inventories and hired additional staff, as optimism towards future business activity improved to the strongest since mid-2022.
"Nevertheless, the situation appears mixed, with many companies still reporting weak client demand, leading to another slight drop in total new orders. Rising price pressures are another risk - August data signalled the fastest uplifts in costs and charges for five months - which has the potential to limit spending and weaken the market recovery,” said David Owen, Senior Economist at S&P Global Market Intelligence.
The past three months of survey data has been broadly indicative of a stabilisation in demand conditions, with many firms commenting on a market recovery amid improved macro-economic factors and rising export business, the report noted.
Firms also noted that increased cost pressures were acting as a headwind to growth. The rate of charge inflation was sharp and much faster than in July, putting some pressure on client demand.
(Writing by Brinda Darasha; editing by Seban Scaria)