Arab Finance: Egypt's non-oil private sector witnessed its sharpest decline in nearly three-and-a-half years during June, with the S&P Global Egypt Purchasing Managers' Index (PMI) recording 46.0 from 47.1 in May, according to the latest PMI survey.
Marking the lowest since January 2023, the headline PMI remained below the neutral 50.0 threshold for the sixth consecutive month, indicating an annual GDP growth of around 3.8% at the end of the second quarter.
The softer performance came as companies continued to face liquidity constraints, raw material shortages, slower supply chains, and higher costs, while the Middle East conflict weighed on regional trade and business conditions.
Businesses reported a further slowdown in demand during June, with new orders posting their fastest decline since November 2022. Nearly 27% of surveyed firms said sales decreased during the month, compared with 11% that reported an increase. The weakness was linked to tighter client liquidity, rising prices, supply chain delays, and lower external demand.
The decline in orders led companies to scale back output for a fifth straight month. Firms also continued to reduce their workforce, although the pace of employment declines eased from May, with respondents indicating that staffing levels mainly fell through natural employee turnover rather than planned layoffs.
While purchasing activity remained subdued, firms increased their inventories to prepare for potential price increases and further supply disruptions. Delivery times also continued to lengthen, reflecting raw material shortages, shipping disruptions in the Strait of Hormuz, and higher fuel prices, although supplier performance improved slightly compared with May.
Price pressures persisted during the month but were less pronounced than in May. Both input costs and output charges rose at slower rates, even as businesses continued to cite the regional conflict as a factor driving fuel and raw material costs higher. Staff costs also continued to increase, recording the second-fastest rise since January 2018 after May's reading.
Looking ahead, surveyed firms remained relatively more positive about future output than they had been earlier this year. Expectations were supported by hopes of fewer disruptions from the regional conflict and additional government support, although overall confidence eased slightly from the previous month.
