Egypt’s non-oil private sector surged to its highest level in almost three years in June, as companies experienced a notable increase in order volumes for the first time since August 2021, the latest Egypt Purchasing Managers’ Index report from Standard and Poor’s (S&P) Global outlined.
Non-oil private sector companies’ sales increased as the Purchasing Managers’ Index (PMI), an indicator of industrial output, climbed to 49.9 in June, an increase from 49.6 in May. Any PMI reading higher than 50 indicates economic growth and readings below 50 signal contraction, S&P Global reported.
According to The Economic Times, a marked uptick in the PMI reading from one month to the next suggests accelerated economic expansion.
The S&P Global report attributes this upturn to reduced price pressures and stabilized economic conditions domestically and internationally.
“Although output levels continued to fall on average, companies were close to growth territory, as a fresh increase helped business capacity in the buying of inputs,” David Owen, Senior Economist at S&P Global Market Intelligence, stated.
Non-oil Private Sector is on The Rise
“Recent efforts by the Egyptian authorities to restore macroeconomic stability have helped improve economic conditions in Egypt,” the director of the communications department at the IMF, Julie Kozack, stated.
The increase in sales was mostly noticed in the manufacturing and service sectors, while construction, wholesale, and retail reported declines.
“Positive expectations were seen in three out of the four monitored sectors, with construction the outlier,” S&P Global reported.
Non-oil firms reported ramping up efforts to expand their capacity as total sales surged, according to S&P Global. Many firms attributed the surge was due to unstable market prices, not accelerating inflation.
Additionally, employment figures within Egypt’s non-oil companies showed a trend of relative stability in June.
Owen stated that businesses seem to be “heading on the road to recovery,” and explained, “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.”
Egypt’s Economy
Over recent years, Egypt’s non-oil sector has contended with significant challenges, including economic shocks stemming from the crisis in neighboring Gaza, currency fluctuations, and disruptions at the Suez Canal, S&P Global stated in March.
During a press briefing on 11 July, the International Monetary Fund (IMF) stated that the previously unmet demand for foreign currency has been resolved, and there are indications that the private sector, which had been shrinking for three and a half years, is starting to grow again.
The IMF press briefing also stated that Egypt’s inflation rate fell for the fourth consecutive month, dropping to below 28 percent in June from 35.6 percent in February.
Nonetheless, Owen highlighted that price pressures stayed relatively subdued compared to the heightened levels experienced during Egypt’s foreign currency crisis earlier in the year.
As Egypt’s non-oil private sector displays promising signs of recovery with increased sales, a hopeful path toward future growth emerges.
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