Egypt's business activity rises in August; jobs continue to fall

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Egypt's non-oil economy has seen a growth in activity and demand for the second month in a row. However, job reductions were strong and led to an overall deterioration in business conditions, according to the latest PMI data.

The headline seasonally adjusted IHS Markit Egypt Purchasing Managers’ Index posted at 49.4 in August, down fractionally from 49.6 in July. The latest reading signalled a deterioration in operating conditions, one that was faster than in the previous month but still only marginal.

Output prices rose for the first time in ten months amid a further increase in input prices.

Egyptian non-oil companies saw further increases in both output and new orders during August, building on the initial recovery seen in July.

Higher activity was registered as businesses saw a pick up in new orders and contract requests, although the rate of expansion was mild and softer than in the previous month.

David Owen, Economist at IHS Markit, said: "The Output Index signalled just marginal growth that was also slightly weaker than in July. This suggests that many firms are still finding business conditions tough, despite the relaxation of many COVID-19 related restrictions."

Notably, some firms commented that sales remained weak as demand was slow to return to pre-COVID levels, suggesting that momentum toward an economic recovery was subdued, IHS Markit said.

Employment continued to fall across the non-oil private sector economy in August, with the sub-component acting as the main drag on the headline index. Jobs were reduced as companies found that workloads remained relatively low. This marked the tenth successive monthly drop in employment, and one that was solid overall.

“Consumer demand remains weak, with new business picking up at only tentative rates in both July and August. As a result, employment levels were not sustained, with firms reporting a strong cut to workforce numbers," Owen added.

(Writing by Seban Scaria; editing by Daniel Luiz)

(seban.scaria@refinitiv.com)

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