Egypt’s PMI slips from highest rating in 3 years but remains on “cusp of expansion”

Cairo – August 5, 2024: Reporting a slight dip in Egypt’s Purchasing Managers’ Index (PMI) for July, Senior Economist at S&P Global Market Intelligence David Owen explained that “the Egyptian non-oil economy still appears to be on the cusp of expansion”.

Registering just below the 50.0 threshold indicating growth, Egypt’s PMI slipped to 49.7 in July, making it the second-highest reading in nearly three years after declining from June’s 49.9.

Businesses reported a “minor yet persistent contraction” in activity levels during Q3 2024.

The report noted that both output and new business activities experienced declines due to weakening sales and rising price pressures in July, pushing companies to reduce purchases following a brief uptick in June.

“Although the pace of decline accelerated slightly from June, it was the second-weakest in nearly three years,” the report explained.

Despite this, non-oil companies responded with cautious optimism for the coming 12 months, with expectations for expansion over the next year, although only 9 percent of firms expressed a positive outlook.

New orders saw a slight downward trend in July, with 9 percent of surveyed companies reporting a decline in sales while 7 percent noted growth.

Companies noted that domestic demand conditions remained subdued but showed signs of improvement, while new export orders continued to rise for the 3rd consecutive month, driven by stronger foreign market demand.

Companies adjusted input purchases to control stock levels, marking the strongest decline in the past 4 months.

On the other hand, input prices rose at an accelerated pace, reaching the highest inflation rate since March, pushed by an increase in the cost of raw materials, affecting around 14 percent of businesses.

“That said, the overall rate of input price inflation remained softer than the broader trend of the past two years,” the report noted.

Despite this inflationary pressure, selling prices increased modestly, the quickest rise since March.

Employment levels saw a slight increase in July after a small decline in June, suggesting a stable labor market holding around the neutral mark of 50.0 throughout 2024.