Non-oil private sector confidence for coming 12M climbs with PMI hitting 3-year high

Cairo – June 4, 2024: Egypt’s non-oil private sector’s confidence in the economic outlook for the next 12 months increased in May, with S&P Global raising Egypt’s Purchasing Managers’ Index (PMI) to 49.6 last month, hitting its highest level in almost three years.

Compared to April’s 47.4, the country’s PMI for May showed a solid trajectory towards growth, barely under the 50 threshold for growth.

S&P Global cited easing inflationary pressure, which fostered a near-stabilization in demand conditions, following the government’s policy adjustments in March to secure better currency availability.

“May's PMI reading of 49.6 was the first indication that the rapid cooling of price pressures is starting to boost the Egyptian non-oil private sector… That said, ongoing downturns in industries such as manufacturing and wholesale & retail show that the recovery is still lopsided and may take more time to spread across the rest of the economy,” explained David Owen, Senior Economist at S&P Global Market Intelligence.

Confidence in the economic outlook drove non-oil businesses to expand their workforce for the 2nd time in three months, while input purchases declined at the slowest rate since February 2022, signaling growing optimism among companies.

Business activity saw a moderate decline last month, driven by mixed performances across sectors. The report noted that while the manufacturing and wholesale & retail sectors continued to struggle, services and construction experienced an uptick in activity.

Inflationary pressures showed signs of a slowdown, with input costs rising at the slowest pace since March 2021.

Lower exchange rates in the local markets led to reduced prices for imported goods, driving down purchase price inflation to its lowest level in four years, the report noted.

The drop in input cost inflation across the non-oil economy for the 3rd consecutive month underscores the sustained impact of improved currency availability.

The easing of overall cost burdens allowed a slight increase in the average prices charged by companies, maintaining a stable pricing environment.