Egypt’s non-oil sector PMI rises into growth territory in August

Breaking a three-year red streak, Egypt’s non-oil private sector economy is back in growth terrorist as businesses raised their output levels in August, according to S&P Global.

The headline seasonally adjusted S&P Global Egypt Purchasing Managers’ Index (PMI) climbed above the neutral 50.0 mark, rising from 49.7 in July to 50.4 in August.

This is the first positive shift in the non-oil private sector since November 2020.

“Notably, several of the PMI sub-indices signaled growth in August, with increases in output, employment, and purchasing activity showing that firms were confident enough to expand their activity and capacity. Business expectations were also up, adding to signs that firms are hopeful that economic conditions are set to be more stable,” explained David Owen, Senior Economist at S&P Global Market Intelligence.

The rise in activity came amid signs of a recovery in demand, although new work slightly eased for the second consecutive month.

Non-oil businesses were optimistic about future business activity in the next 12 months, the highest level since mid-2022, and boosted their inventories and hired more staff in August.

“Nevertheless, the situation appears mixed, with many companies still reporting weak client demand, leading to another slight drop in total new orders. Rising price pressures are another risk - August data signaled the fastest uplifts in costs and charges for five months - which has the potential to limit spending and weaken the market recovery,” Owen said.

Despite the positive trends, non-oil firms faced heightened inflationary pressures, with the acceleration in input price inflation driven by a weakening pound against the US dollar, leading to higher purchase prices and steep increases in selling charges.

A number of surveyed businesses noted that increased cost pressures had acted as a headwind to growth in August by dampening the expansion in business activity.

Efforts to pass through higher costs to customers also resulted in an increase in average prices charged. Moreover, the rate of charge inflation was sharp and much faster than in July, putting some pressure on client demand.