S&P raises Egypt’s PMI score to 47.8 in May, its highest since Feb 2022

Egypt’s PMI (Purchasing Manager’s Index) witnessed a slight climb in May to reach 47.8 from April’s 47.3. This is the second time S&P has raised Egypt’s PMI and is its highest rating since February 2022.

The recording is lower than the 50 mark, which indicates growth.

"The Egypt PMI remained in negative territory in May, but showed further promise that current economic headwinds were beginning to dissipate,” explained David Owen, Senior Economist at S&P Global Market Intelligence, in the report. “The headline index rose for the second month running to 47.8, while the two main sub-indices of Output and New Orders rose to their highest levels in 17 and seven months, respectively.”

S&P explained that business activity levels continued to fall, however, at a softer pace in May, according to S&P, “as progress towards a stabler demand environment led to a slower, but still solid contraction in activity levels”.

Confidence for the next 12 months was higher than revealed in April’s report, which was the lowest recording seen by the report since its creation. Non-oil businesses remained concerned about demand conditions, inflationary pressures and supply-side challenges, with only 6% of those surveyed hopeful about output levels over the coming year.

Purchase prices were mostly unchanged as exchange rates steadied, with selling prices rising at a quicker pace. S&P noted that selling prices were still weaker in comparison to recent numbers.

Owen added that “the improvement on the prices side also helped to strengthen the demand picture. While new orders both at home and abroad continued to fall, rates of decline softened from April, with the overall contraction in sales easing to the least marked since October last year”.

Purchasing activity overall remained affected by rising input prices and weak demand, reflected by continued contraction in companies’ input inventories; input purchases decreased to the slowest seen since last October.

S&P’s May survey data highlighted that Egypt’s inflationary pressures have softened from the multi-year highs recorded in late-2022 and early-2023, adding that non-oil businesses’ new orders saw a slower decline due to subdued demand mainly caused by inflation.

“Notably, new business intakes in the services economy grew for the second time in three months. Additionally, sales to foreign clients decreased at the softest rate in 2023 so far,” the report wrote.