The seasonally adjusted S&P Global Egypt (PMI) index registered 46.4 in July, up from a two-year low of 45.2 in June.
The rise in the index was the largest in just over a year, although it remained below the growth threshold of 50.0, indicating deteriorating operating conditions.
Egyptian non-oil private sector continued to record a decline in new purchase orders at the beginning of the third quarter. The rate of inflation eased since June but remained sharp as several committee members found that higher prices led to a decrease in customer spending.
The recent decline was seen in all four sectors surveyed, namely manufacturing, construction, wholesale and retail trade and services. As a result, companies reduced their production levels further, with the contraction eased slightly from the previous month but remained sharp overall.
In addition to weak demand, survey participants continued to highlight that a shortage of raw materials has limited their capabilities. As a result, backlogs rose slightly for the second month in a row.
While price pressures caused more problems for the non-oil economy, there were signs that inflation was beginning to subside.
“Fewer firms (29%) reported an increase in input costs than in June, when the pace of inflation hit a four-year high. As costs have risen, companies have found that ongoing supply chain challenges linked to the pandemic and the Russo-Ukrainian war, as well as a rising US dollar, have pushed up prices for raw materials, fuel and food. In response, non-oil companies raised their selling prices at a much slower pace. However, shipping inflation remains the second-fastest since July 2018.”
“Finally, business expectations for the next 12 months remained largely lower in July. After rising to a five-month high in June, sentiment fell sharply and was one of the weakest on record. Only 13% of companies predicted growth of output over the coming year.”