Business conditions in Egypt deteriorated further in May, extending the downturn witnessed since the end of 2020, a new survey showed on Thursday.

The seasonally adjusted IHS Markit UAE Purchasing Managers' Index (PMI), which covers manufacturing and services rose from 47.7 in April to 48.6 in May,

According to HIS Markit, the index signalled a sixth consecutive monthly decline in the health of the non-oil sector, led by further decreases in output and new business.

New orders saw a decline for the sixth month in a row - but to the least extent since February - due to weak customer demand triggered by COVID-19 pandemic. However, export orders rose sharply, the report said.

David Owen, Economist at IHS Markit, said: "The Egypt PMI remained in contraction territory during May but did improve slightly from April, signalling a slight step towards stability in the non-oil economy. The Output and New Orders Indices were both up to three-month highs, while the Stocks of Purchases Index suggested that firms were close to expanding their inventories after reductions in the first four months of 2021."

Surveyed firms showed confidence about the year ahead, as the outlook for business activity improved to the strongest since February 2018. A recovery in market conditions from the pandemic was seen as a key driver of growth over coming months, the report said.

"Business expectations data offered a glimpse of a positive future, as firms were at their most optimistic since early 2018 and expectant of a strong recovery in business conditions to follow soon," Owen said.

(Reporting by Seban Scaria; editing by Daniel Luiz)

(seban.scaria@refinitiv.com)

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