Egypt: Operating conditions in the non-oil private sector improve in July
The Emirates NBD Egypt Purchasing Managers’ Index (PMI) increased to 50.3 in July from 49.4 in June, crossing the 50-threshold that separates expansion from contraction in the non-oil private sector and hitting an eight-month high.
Operating conditions in the non-oil private sector improved in July as firms reported an increase in volumes of new business for the first time in three months. This was due to stronger domestic and foreign demand. Stronger domestic demand was encouraged by healthy inbound tourism. However, shortages of raw materials and higher costs weighed on operating conditions in July and led output to fall for the third consecutive month. Furthermore, employment levels fell. Businesses in the non-oil private sector lowered purchasing activity in July, partly due to a lack of liquidity. As a result, stocks of purchases declined in the month, although at a slower pace than in the previous month.
On the price front, higher fuel costs and energy prices led to a sharp increase in input costs in July. Reacting to this, firms raised their selling prices in July, leading output inflation to hit an 11-month high. Looking ahead, businesses remained optimistic about the coming 12 months in July, thanks to an encouraging global economic picture and a rebound in tourism.