Egypt’s non-oil business conditions remained in decline in August as companies continued to report some signs of a recovering market, according to its Purchasing Managers’ Index (PMI).

The headline index remained at 49.2 in August, unchanged from July, its joint highest level for two years having risen from 49.1 in June.

Anything below 50.0 indicates a decline in business conditions, but the report said there was positivity towards future activity, helping lead to renewed increases in employment and stock levels.

Business output fell modestly but at a slightly stronger rate in August, as businesses signalled that tougher price pressures had led to curbs on capacity.

Input cost inflation quickened to a five-month high, resulting in a faster rise in selling prices compared to July's recent low, the report said.

The S&P Global Egypt PMI said: “While declines remained broad-based across the sectors monitored, linked to weak economic conditions both at home and abroad, there were frequent mentions from panellists of a recovery in market demand.

“Despite this, non-oil companies indicated that a stronger round of cost inflation had constrained output, as weak exchange rates, raw material supply issues and wage pressures led to the fastest increase in business expenses for five months.”

David Owen, senior economist, S&P Global Market Intelligence said a pick-up in inflationary pressures was also indicated by the August survey findings, with some firms noting that a faster increase in input costs had reduced overall activity.

“Comments from surveyed companies suggest that exchange rate problems and cost of living pressures will need to be fully addressed before the country can escape the detrimental effects of inflation which currently runs at a record high,” he said.

The data showed a rise in employment numbers for the first time since November 2022, as well as a renewed expansion in input stocks, the report added.

Despite strengthening, the activity outlook was still among the lowest recorded in the series history with only 9% of respondents positive that output will grow over the coming year, with many still fearing recessionary conditions, the report concluded.

(Reporting by Imogen Lillywhite; editing by Seban Scaria)