Egypt’s non-oil private sector Purchasing Managers’ Index (PMI) increased to 49.1 in June, marking the highest level since August 2021, according to a report published by Standard and Poor’s (S&P) Global.
The Purchasing Managers Index (PMI) is an economic indicator that assesses the non-oil business conditions of a country by measuring various factors including production, employment, logistics, and trade. When the PMI score is below 50, it indicates a contraction in business conditions, while a score above 50 signifies an expansion.
Despite Egypt’s positive developments, June’s score of 49.1 reveals a continuing deterioration in the country’s non-oil private sector – remaining below the 50 threshold.
“Egypt’s non-oil private sector economy remained under pressure at the end of the second quarter of 2023, with the PMI once again signalling a deterioration in business conditions,” reads S&P’s report.
The report also highlighted that production output and new orders for goods and services experienced moderate declines, whereas inflationary pressures cooled down to a 16-month low.
The cited causes for the continuing decline include price pressures, liquidity concerns, and weak export demand.
“Despite positive directional movements in a number of sub-indices, business confidence fell to its second-lowest level on record, highlighting a sombre mood amongst businesses across Egypt’s non-oil private economy,” explained Joe Hayes, principal economist at S&P Global Market Intelligence.
Hayes added that confidence in the private sector can be regained if Egypt continues to witness an upward turn in outputs and new orders.
Expectations for sector activity over the next 12 months remained relatively cautious. The report highlighted that growth expectations were only mildly positive, representing the second weakest outlook since the series began in April 2012.
In light of recent economic challenges, Egypt’s government stepped up efforts to strengthen its private sector.
In April 2023, Egypt established a Supreme Council for Investments that plans to boost investment and ease business restrictions.
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