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Egypt’s business conditions came close to reaching growth territory in May, after a marked cooling of inflationary pressures since the early part of the year, a survey showed on Tuesday.
The country’s headline Purchasing Managers’ Index (PMI) jumped from 47.4 in April to 49.4, its highest level in three years. Whilst still below the 50.0 no-change mark, the index signalled only a marginal decline in operating conditions.
"May's PMI reading of 49.6 was the first indication that the rapid cooling of price pressures is starting to boost the Egyptian non-oil private sector," said David Owen, Senior Economist at S&P Global Market Intelligence.
Business activity dropped at the slowest rate since July, while firms took on more staff amid growing confidence that sales will begin to improve, according to the S&P Global PMI report.
Cooling inflation and increased currency availability meant input costs faced by businesses rose at the weakest pace since March 2021 with purchase price at its lowest level in four years.
The report said after policy measures aimed at improving currency availability were announced in March, firms widely commented on greater price stability and stronger confidence over the latest survey period.
“Many businesses specifically linked this to a lower US dollar exchange rate in local markets, which led to falling prices for imported goods,” the report said.
The report attributed the rise in employment to confidence in the 12-month outlook increasing during the month.
New business levels fell at the slowest rate since September 2021, while new export orders increased for the second time in three months amid rising foreign demand.
The manufacturing, wholesale and retail sectors posted further declines in contrast with uplifts across services and construction.
The general slowing of cost burden rises paved the way for another mild increase in average prices charged in May, the report said.
The ongoing downturns in industries such as manufacturing and wholesale & retail show that the recovery is still lopsided and may take more time to spread across the rest of the economy, said Owen.
"With input cost inflation easing further, the data nonetheless signals a promising outlook for Egyptian businesses.”
(Writing by Imogen Lillywhite; editing by Brinda Darasha)
