Egypt: PMI dips marginally in August, remaining in contractionary territory
Egypt’s Purchasing Managers’ Index (PMI)—which measures business activity in the non-oil private sector—inched down to 49.4 in August from 49.6 in July. The figure thus ended three consecutive months of increasing readings following April’s nadir of 29.7, which remains the lowest point on record since the current survey began in April 2011 and reflected the effects of Egypt’s first full month with strict coronavirus restrictions. Readings below 50 indicate an overall decrease compared to the previous month.
The marginal fall in the PMI was predominantly driven by continued weakness in employment figures, which declined for the 10th straight month amid relatively low workloads and cautious sentiment regarding the coming year. However, output and new business grew for the second month in a row, building on the initial recovery seen in July following the easing of coronavirus-related restrictions in the country. Furthermore, foreign demand increased as the quickest pace in nearly three years amid an uptick in exports.
On the price front, higher input prices and an uptick in wage costs prompted firms to increase output prices for the first time since October 2019.
Regarding this month’s print, David Owen, economist at IHS Markit, commented:
“Higher private sector activity in Egypt was registered for the second month running in August, according to the latest PMI survey data. That said, the Output Index signaled just marginal growth that was also slightly weaker than in July. This suggests that many firms are still finding business conditions tough, despite the relaxation of many COVID-19 related restrictions.”