Egypt: PMI falls back in July
Egypt’s Purchasing Managers’ Index (PMI)—which measures business activity in the non-oil private sector—fell to 49.1 in July from 49.9 in June. As such, the reading marked the eighth sub-50 print in consecutive months, with readings below 50 indicating an overall worsening of operating conditions compared to the previous month.
The downturn in the PMI was driven by marginal decreases in new orders and output, with domestic demand conditions weakening due to hesitant consumer spending. However, export sales rose solidly in the month and employment levels rose for the first time since October 2019, both of which tempered the overall decline somewhat. On the price front, input price inflation eased in July as the recent surge in raw material prices slowed. Consequently, output prices rose only marginally in the month as firms chose to cut prices in order to stimulate demand. Finally, sentiment rose in July, with firms notably optimistic for the year ahead amid expectations of improving market conditions in the coming months.
Regarding the print, David Owen, economist at IHS Markit, commented:
“Employment growth across the Egyptian non-oil economy in July pointed to an improved confidence that the worst impact of the pandemic is over. Many businesses are now eager to boost capacity, particularly as new order growth recorded in June led to a modest pile-up of outstanding work in the latest survey period. That said, with the New Orders Index falling back into negative territory, it is clear that the economic recovery remains fragile and in need of further supportive measures to strengthen demand.”