Egypt: PMI increases in August; conditions continue to worsen
The IHS Markit Purchasing Managers’ Index (PMI)—which measures business activity in the non-oil private sector—rose to 49.8 in August from 49.1 in July. Consequently, the index remained below the 50-threshold for the ninth consecutive month, signaling a continued, albeit milder, overall deterioration of operating business conditions compare to the prior month.
August’s upturn was largely due to a bounce-back in activity and higher tourist arrivals as travel resumed, which led to an expansion of output and new orders, although growth was marginal. Consequently, firms increased staff levels and employment rose for a second consecutive month. On the price front, input prices increased at the sharpest rate in two years due to high commodity prices, higher prices for transport and custom fees, as well as supply shortages. As such, firms passed on a large proportion of the higher input costs, resulting in output charge inflation rising at the fastest pace in three years. Lastly, firms remained optimistic in August on the back of a firming second phase of the economic recovery and expecting output to expand in the coming 12-month period as both demand and capacity improve.