Egypt: PMI continues to crawl slowly back to positive territory in July
August 3, 2017
The Emirates NBD Egypt Purchasing Managers’ Index (PMI) rose from 47.2 in June to 48.6 in July, edging closer to the 50-point threshold that separates contraction from expansion in the non-oil producing private sector. July’s figure was the highest in 12 months, and is a further sign that the economy is gradually finding its feet following economic shock therapy at the end of last year with the massive devaluation of the pound and the enactment of other painful structural reforms.
July’s rise was underpinned by a stabilization in new orders following 21 consecutive months of decline, with new export orders rising once more, as firms continued to reap the rewards of the weaker pound. Output in July fell more modestly than in the prior month, which led to a moderation in the reduction in input buying, while firms continued to shed workers at a solid rate in response to weaker economic conditions. Elevated inflation for key inputs such as raw materials and energy remained a key impediment to businesses, with input cost inflation accelerating to the fastest pace since January. This situation could be aggravated in the coming months, due to recent fuel price hikes and electricity tariff reforms which are likely to stoke price pressures further.
Author: Oliver Reynolds, Economist