Egypt: Operating conditions in the non-oil private sector appear ripe for a resurgence in August
September 4, 2018
The Emirates NBD Egypt Purchasing Managers’ Index (PMI) increased to 50.5 in August from 50.3 in July, inching further above the 50-threshold that separates expansion from contraction in the non-oil private sector for the second consecutive month and hitting a nine-month high. Notably, operating conditions have not improved for two months running since September 2015.
Firms reported an increase in new business, from both domestic and foreign sources, in August. Furthermore, output was stable, meaning that it did not decrease for the first time in four months. On the back of heftier order books, businesses raised employment levels at the fastest pace in over eight years and ended a period of 38 consecutive months of job losses. Firms also increased their purchasing activity in August.
On the price front, although input cost inflation moderated in August, it remained high due to increased purchase prices, particularly for fuel, electricity and iron. Labor costs also rose in August. Meanwhile, in line with higher input costs, output prices were raised in August, albeit at a slower pace than in July. Looking ahead, businesses remained optimistic for the coming 12 months in August, although optimism slipped to the lowest since October 2016 due to concerns over rising prices.
Author: Edward Gardner, Economist