Egypt: PMI rises in June indicating mildest contraction in conditions in seven months
July 6, 2021
Egypt’s Purchasing Managers’ Index (PMI)—which measures business activity in the non-oil private sector—rose to 49.9 in June from 48.6 in May, hitting a seven-month high in the process. Nevertheless, the reading marked the seventh sub-50 print in consecutive months, with readings below 50 indicating an overall worsening of operating conditions compared to the previous month.
The uptick in the PMI was driven by marginal increases in new orders and output, with both rising for the first time since November 2020. Moreover, export sales rose solidly in the month—amid a noted rise in tourist numbers—boosting the overall reading somewhat. On the price front, input price inflation continued to increase in June due to higher raw material costs. However, output prices rose only marginally in the month as firms chose to absorb the extra cost burden in order to remain competitive. Finally, sentiment rose in June, 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:
“A second successive rise brought the Egypt PMI almost to the 50.0 growth mark in June, posting 49.9 to record its highest reading in seven months. While output and new orders moved into expansion territory, it was the Employment Index that held back the headline figure as job numbers continued to fall overall. However, with demand creeping up and Covid-19 restrictions easing, it might not be long before hiring growth resumes.”
Author: Stephen Vogado, Economist