RIYADH: Egypt’s non-oil private sector continued to contract in June, with the Purchasing Managers’ Index falling to 48.8 from 49.5 in May, as business confidence plunged to its lowest level on record.
According to the latest S&P Global survey, this marked the fourth consecutive month below the neutral 50 threshold, signaling a continued deterioration in operating conditions. The decline was accompanied by the sharpest reduction in purchasing activity in nearly a year and a pronounced drop in sentiment about the year ahead.
The June PMI downturn came amid escalating regional and economic pressures, with spillovers from the Gaza conflict suppressing tourism, remittance flows, and Suez Canal revenues — all key sources of foreign exchange and domestic demand.
Concurrently, intermittent disruptions in Israeli gas exports have sparked concerns over energy reliability, while elevated freight rates have inflated import costs.
David Owen, a senior economist at S&P Global Market Intelligence, said: “Overall expectations for future activity were the lowest ever recorded in June.”
He added: “This downbeat sentiment reflects subdued hopes for order books, as well as concerns that geopolitical risks could cause greater economic disruption.”
The survey, conducted between June 12 and 20, highlighted deepening demand weakness across the economy.
Businesses widely reported that weaker order books prompted them to scale back output, while a broad stagnation in local markets contributed to the drop in new orders.
Although the pace of decline accelerated compared to May, S&P Global noted that it remained softer than the series average.
Purchasing volumes decreased for the fourth month running, with the contraction gathering pace to become the fastest recorded in nearly a year.
The manufacturing sector saw the largest cutbacks among the surveyed industries.
As a result of reduced buying levels, inventories stalled in June after having risen slightly in the preceding three months.
The data also pointed to ongoing strains in supply chains, reflected in a slight lengthening of supplier delivery times for the second month in a row.
Employment levels continued to weaken, though the rate of job shedding was described as fractional and was the softest observed in the current five-month sequence of workforce reductions.
S&P Global noted that staffing cuts were driven not only by diminished demand but also by the prevailing pessimism regarding future activity.
“Although rates of contraction accelerated from the prior survey, they remained softer than their respective historic trends,” Owen added.
“Nevertheless, a faster drop in input purchases combined with stalling hiring activity suggests that firms expect demand to remain low and are thereby looking to make cost savings.”
On the cost side, there was a modest reprieve for businesses. Input cost inflation eased to a three-month low, while the pace at which firms raised output prices slowed considerably from May’s seven-month high.
This softening of price pressures provided some relief but did little to offset the overall deterioration in confidence.
The S&P Egypt PMI is a composite index derived from survey responses from around 400 private-sector firms, designed to provide a single-figure snapshot of non-oil business conditions.
Readings above 50 signal improvement, while those below 50 indicate deterioration.
