RIYADH: Non-oil companies in Egypt saw sales growth for the first time in nearly three years, as the Purchasing Managers’ Index rose to 49.9 in June from 49.6 in May.
According to S&P Global, this rise in the index, just fractionally below the 50 mark, was driven by government policy moves that supported a relaxation of price pressures, ultimately showing signs of economic stability in the country.
Egypt’s non-oil sector has been facing headwinds over the past few years, with the country battling economic shocks due to the crisis in neighboring Gaza, currency pressure, and the Suez Canal disruption, the US-based credit rating agency said in its previous reports.
“Egypt’s non-oil economy ended the first half of 2024 on a high according to the latest PMI data. With the headline PMI reaching 49.9 and total new order volumes rising for the first time in nearly three years, businesses appear to be heading on the road to recovery,” said David Owen, senior economist at S&P Global Market Intelligence.
S&P Global noted that any PMI reading above 50 indicates growth in the non-oil sector, while readings below 50 signal contraction.
The report further noted that the country’s output levels fell at the softest rate in nearly three years, while the volume of input purchases rose for the first time since December 2021.
Moreover, input cost inflation remained soft despite accelerating to a three-month high in June, leading to another modest rise in selling charges.
Additionally, business intakes at non-oil firms in Egypt rose for the first time since August 2021, as the proportion of firms seeing demand improvement started to outweigh those seeing a reduction.
“Although output levels continued to fall on average, they were also close to growth territory, as business capacity was helped by a fresh increase in the buying of inputs. If we see further rises in sales and purchases in the second half of this year, firms should have the motivation and need to expand their output,” said Owen.
He added: “Another positive is that price pressures have remained much cooler than in the first quarter of this year during the country’s foreign currency crisis.”
The report highlighted that the manufacturing and services sectors witnessed a rise in new orders in June, while the construction, wholesale and retail industries saw a decline in the month.
Moreover, employment numbers across the Egyptian non-oil economy were relatively stable in June.
Even though some firms opted to boost their workforces amidst rising sales, many companies reported layoffs and the non-replacement of leavers, the report added.
The data for June also revealed that inflationary pressures on businesses had been greatly suppressed in the second quarter of the year.
“While June saw the fastest rise in input prices for three months, firms generally commented that this was due to a high degree of volatility in market prices rather than an accelerating inflation trend,” concluded Owen.
