Egypt's PMI hikes to 49.9 in June

CAIRO – 6 July 2021: IHS Markit Egypt Purchasing Managers’ IndexTM (PMI) recorded 49.9 in June, slightly below the neutral level at 50, up from 48.6 in May.

It marked the highest level since November 2020, according to the announced data.

The data revealed that the 1.3-point rise in the index was mostly driven by the Output and New Orders sub-components, both of which rose above 50.0 for the first time in seven months. Whilst marginal, these readings pointed to an increase in activity and new business, which panelists largely attributed to a strengthening in market conditions as COVID-19 measures eased.

"A second successive rise brought the Egypt PMI almost to the 50.0 growth mark in June, posting 49.9 to record its highest reading in seven months. While output and new orders moved into expansion territory, it was the Employment Index that held back the headline figure as job numbers continued to fall overall. However, with demand creeping up and COVID-19 restrictions easing, it might not be long before hiring growth resumes,” David Owen, Economist at IHS Markit, said.

Owen added that input price inflation picked up again in June, giving both firms and consumers cause for concern. The latest rise in cost pressures was the sharpest for almost two years, as commodity prices, particularly metals and plastics, drove a steep increase in purchasing costs.

“For now, firms are largely keeping output charges stable in an effort to boost sales, but we could see a sharp uptick in prices later in the year if demand strengthens and cost burdens become too large,” he stated.

According to the data, concerns surrounding inflationary pressures were again marked in June, as input prices rose at the quickest pace since August 2019. This was almost solely led by a sharp uptick in raw material prices, with iron, copper and plastics among those reported up in price.

Despite this, output charges increased only marginally as many firms opted to absorb part of the burden to support new business growth.

“Finally, the outlook for non-oil activity weakened from May's recent high, but was still stronger than the survey average, with nearly half of all panelists predicting an expansion over the next 12 months. This was often linked to hopes of an improvement in market conditions as COVID-19 restrictions are ended,” it added.