Egypt Purchasing Managers’ Index hits 4-month high in June

CAIRO – 6 July 2020: IHS Markit Egypt Purchasing Managers’ Index (PMI) Jumped to 44.6 in June up from 40.7 in May and 29.7 in April, marking the highest in four months.

According to HIS Markit press release issued Monday, the Egyptian non-oil private sector faced a further deterioration in business conditions in June, although there were positive signs as rates of decline in both activity and new business slowed considerably from May.

It added that firms were still actively cutting employment in June, with the rate of job shedding quickening to a near four-year high, noting that firms reported choosing not to hire new workers, while some laid off employees in order to reduce staffing costs. “Salaries were also adjusted, with many firms lowering wages due to reduced working hours. As a result, staff costs fell for the third month in a row.”

At the same time, backlogs at Egyptian companies rose for the second consecutive month, and at a record pace, to signal that firms were increasingly constrained on business capacity.

Meanwhile, firms reported a softer reduction in purchasing activity in June, as the decline in new business also slowed.

"June's PMI data gave some promising signs that the Egyptian economy is beginning to stabilise.

The headline PMI was up to 44.6, from 40.7 in May, signalling a further slowing in the downturn caused by the COVID-19 crisis that reached its worst level in April. Activity fell at the weakest pace in four months, supported by a similar easing to the decline in new business,” Economist at HIS Markit, David Owen commented.

"Employment numbers still fell at an accelerated rate in June, although multiple signals suggest this will soon change. Higher demand at some companies, increased backlogs and sentiment rising to a six-month high all point to firms hopefully restarting hiring in the near future,” Owen said.

He added that firms sourcing medical equipment and other raw materials saw a sharp uptick in purchases prices in June, which led to a renewed rise in cost burdens across the non-oil private sector. As a result, wages were reduced for the third month in a row.

On June 28, Egypt started implementing a co-existing plan with COVID-19, including the cancelation of the partial curfew.

<blockquote class="embedly-card"><h4><a href="https://www.egypttoday.com/Article/1/88893/Egypts-PM-announces-bundle-of-measures-aimed-at-co-existing">Egypt's PM announces bundle of measures aimed at co-existing with COVID-19</a></h4><p>CAIRO - 23 June 2020: Prime Minister Mostafa Madbouli announced Tuesday a bundle of measures - including the cancelation of the partial curfew - aimed at co-existing with COVID-19 that will go into effect on Saturday. Restaurants and cafes will resume work with 25 percent capacity. Shisha will still be banned.</p></blockquote>

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