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Egypt’s non-oil private sector saw a soft decline in July after the rate of contraction slowed down at the end of H1 2023.
The headline purchasing managers’ index (PMI) moved up marginally from 49.2 from 49.1 in June, below the threshold, which indicated economic expansion but above the long-running average.
Business activities have shrunk for 32 consecutive months; July's contraction was the slowest since August 2021.
The S&P Global Egypt PMI report revealed output decreased at the slowest pace since September 2021, as new order inflows dropped modestly, and there was a renewed uptick in backlogs.
Staffing levels and inventories near stabilised, with the inventories helped by a renewed improvement in supply conditions.
Companies also reported the slowest rise in their own charges since April 2022, but exchange rate weakness against the dollar meant that purchase prices continued to rise sharply, the report said.
The report said firms remained “fairly underwhelmed” about the outlook for future activity, with the degree of confidence picking up from June but remaining among the lowest recorded.
David Owen, senior economist at S&P Global Market Intelligence, said there had been positive signals for inflationary pressure which will be welcomed by businesses and customers alike, following a record high CPI reading of 36.8% in June.
He added that selling prices rose modestly and at the softest pace since April 2022, which should help to boost demand in the months ahead.
“Despite the general movement back to stabilisation territory, firms are still fairly subdued about the future, with just 6% of survey panellists expecting output to grow over the next 12 months.
“Nevertheless, if the demand recovery spreads and official inflation metrics show a softening, we could see a pick-up in sentiment soon. A near-stabilisation of staffing numbers following a seven-month decline also suggests that firms may be preparing for a recovery.”
(Writing by Imogen Lillywhite; editing by Seban Scaria)
