Egypt’s non-oil private business activity grows in August after 3-year decline

Updated 9/3/2024 7:55:00 AM

Arab Finance: Egypt's non-oil private sector experienced its first expansion in three years last August, according to the S&P Global Egypt PMI.

The headline seasonally adjusted Purchasing Managers’ Index (PMI), which provides a composite snapshot of operating conditions, rose above the neutral threshold to 50.4 in August from 49.7 in July, indicating a slight improvement in business conditions.

This rebound was driven by businesses increasing their output levels, spurred by reports of a recovering demand, despite a slight easing in new work for the second consecutive month.

Companies responded to the improved outlook by expanding their inventories and hiring additional staff, with optimism towards future business activity reaching its strongest level since mid-2022.

However, the sector faced significant inflationary pressures as the weakening of the Egyptian pound against the US dollar led to higher costs.

Additionally, transport costs and staff wages increased, with firms raising salaries to address cost-of-living pressures. These rising costs led to longer delivery times and were cited by some businesses as a factor dampening the pace of growth in August.

Despite the challenges, four out of the five sub-components of the PMI positively influenced the headline index in August, with renewed rises in output and stocks of purchases.

While new orders saw a marginal decline, the overall market conditions have shown signs of stabilization over the past three months, with firms reporting a recovery amid improved macroeconomic factors and rising export business.