The Egyptian non-oil sector recorded its lowest level in two years in June on the heels of declined demand, inflation, EGP devaluation, and material shortage, data collected in S&P Global Egypt Purchasing Managers’ (PMI) survey showed.
The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ Index (PMI) – a composite gauge designed to give a single-figure snapshot of operating conditions in the non-oil private sector economy – slipped to 45.2 in June from 47.0 in May.
The PMI survey’s data showed the increase in input costs accelerated to a four-year high, pushing up inflation.
In June, both the PMI’s output and new order indices fell, hitting the lowest level since the second quarter of 2020.
Sales were the weakest in the manufacturing and wholesale and retail sectors, while the construction sector stabilized, as new orders and input in the sector inched up.
Moreover, 45% of surveyed companies reported an increase in their expenses which was reflective of a considerable rise in input costs.
Businesses, however, were more confident about the outlook for next year, with overall sentiment going up to a five-month high on the back of anticipated recovery.
“June PMI data shows that hawkish monetary policy in the US and a rising dollar value is likely to keep supply-side inflation running high. The Fed's latest rate rise of 75 basis points adds to these concerns, while the Central Bank's decision to keep policy unchanged in June could put additional pressure on exchange rates,” Economist at S&P Global Market Intelligence David Owen commented.
On June 23rd, the Central Bank of Egypt’s (CBE) Monetary Policy Committee (MPC) decided to maintain the overnight deposit rate, overnight lending rate, and the rate of the main operation at 11.25%, 12.25%, and 11.75%, respectively.
Earlier in June, the Federal Reserve raised interest rates by 0.75 percentage points, marking the largest increase since 1994.
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