The Egyptian non-oil private sector moved closer to stabilisation during June, with the Emirates NBD Egypt Purchasing Managers’ Index (PMI) rose to 49.4 during June, from 49.2 in May, as new orders and employment both contracted at softer rates, offsetting the accelerated reduction in output. According to Emirates NBD Egypt PMI, published on Tuesday.
However, the PMI cites that staffing levels fell at the slowest rate since June 2015, inflationary pressures meanwhile continued to build as overall input costs rose further. As a result, output prices increased at an accelerated pace.
“The June contraction shown by the PMI was marginally slighter than that in May, but the failure to consistently post above the 50.0 mark reflects the fact that Egypt’s economic recovery has to now been achieved primarily through external rebalancing and government investment, and that the private sector continues to lag. That is not to say that there has been no improvement, however; the average PMI reading of 49.6 recorded in both Q1 and Q2 make them the strongest quarters in years, and business optimism remains fairly upbeat,” said Daniel Richards, MENA Economist at Emirates NBD.
The modest fall in output contributed to the overall decline in business conditions at the end of the second quarter, partially due to weaker demand, according to the report issued.
However, both total new orders and export orders decreased to lesser extents than observed in May.
Despite the further decline in staffing levels during June in non-oil private sector companies, job shedding was only fractional, to the second-slowest pace observed in the current 37-month sequence of contraction.
Purchasing activity, meanwhile, marginally slipped into contraction territory in June, with firms mentioning a lack of liquidity.
Elsewhere, firms continued to report inflationary pressures during June. Both purchasing prices and staff costs underpinned the increase in overall input charges as raw material prices and living costs rose.
Consequently, firms increased their average selling prices during June. However, overall costs rose at a stronger rate than output charges.
Meanwhile, businesses remained confident that output would grow over the coming year. Furthermore, the degree of optimism strengthened from May, underpinned by expectations of further investments and new contracts.