Egypt: Non-oil private sector falls back into contraction in May
The Emirates NBD Egypt Purchasing Managers’ Index (PMI), which measures business activity in the non-oil private sector, fell to 48.2 in May from 50.8 in April. This means the PMI once again fell below the 50-threshold that separates contraction from expansion, after climbing above it in April for the first time in eight months.
The deterioration in non-oil private sector conditions in May was driven by output and new orders, both of which fell in the month after registering increases in April. Specifically, new export orders extended its run of declines to nine months. A tough operating environment led businesses to reduce inventories in May, with firms citing difficulties in holding high levels of stock during a time of weak demand. Employment also fell in May at the quickest pace since October 2017. In terms of prices, input inflation accelerated slightly but remained modest, while output charges were reduced for the fourth time in five months. Lastly, turning to expectations of future output, businesses became slightly less confident in May.
Daniel Ricards, MENA economist at Emirates NBD, reflected: “The private sector has continued to bear the brunt of ongoing economic reform efforts in Egypt, and will likely remain over pressure over the summer period. While easing price growth in recent months […] has offered some respite, upcoming subsidy reforms and a renewed pause in the CBE’s cutting cycle mean that conditions remain difficult for private firms.”