Egypt's non-oil private sector sees softer contraction in June

Updated 7/5/2023 8:04:00 AM

Arab Finance: Egyptian non-oil private sector continued contracting in June at a softer pace as inflationary pressures fell marginally and remained significantly lower than the January highs, according to the S&P Global Egypt PMI release issued on July 5th.

The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ Index (PMI) increased to 49.1 in June from 47.8 in May, remaining below the 50-level, the data showed.

Signaling only a slight fall since May, the headline index was up to a 22-month high driven by both output and new orders that declined at weaker rates.

At the end of the second quarter, Egypt's non-oil private sector economy was still struggling, with the PMI once again indicating a worsening in business conditions.

Price pressures, liquidity problems, and sluggish demand, according to panel member reports, drove total business activity volumes lower at the end of the second quarter.

The level of employment fell for a seventh consecutive month in June due to a weak confidence for the 12-month outlook.

"An easing of inflationary pressures will also be welcomed. After the steep price increases seen at the start of the year, fewer companies are reporting such high cost pressures," Principal Economist at S&P Global Market Intelligence Joe Hayes stated.

Overall input cost inflation slowed to a 16-month low, owing to a slower rise in purchasing costs.

Surveyed Egyptian non-oil enterprises were unenthusiastic about growth prospects for the upcoming 12 months. Price survey results indicated a further slowing of inflation in Egypt's non-oil private sector.

"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 added.