Egypt’s non-oil private sector contracted in June at its slowest pace since the coronavirus pandemic first hit the economy in March, but remained in sharp decline, a survey showed on Monday.
IHS Markit’s Purchasing Managers’ Index (PMI) for the non-oil private sector came in at 44.6 last month, up from 40.7 in May but still far below the 50.0 threshold that separates growth from contraction.
Private non-oil activity has declined every month since July 2019.
“While signalling a sharp decline in business conditions, (June’s figure) was the highest seen in four months,” IHS Markit said.
The June figure was well above the 29.7 recorded in April when the pandemic was at its height, which was its worst reading in a decade. However, it was still below the 47.1 recorded in February before the outbreak began.
The government all but shut down Egyptian tourism, which it says accounts for about 5% of the economy, when it suspended scheduled flights on March 19.
Analysts say that including indirect jobs and spending as well as investment, tourism may account for as much as 15% of the economy.
The government restarted international flights and reopened major tourist attractions including the Great Pyramids of Giza on July 1. Restaurants and cafes have also been allowed to reopen.
“Sub-indices for output and new orders also rose to four-month highs in June,” IHS Markit added.
“Despite still pointing to marked downturns in activity and demand across Egypt’s non-oil private sector, the rate of contraction softened considerably from the previous month.”
The output sub-index improved to 42.7 from 36.0 in May, while new orders came in at 41.7 compared to May’s 36.1.
“Firms sourcing medical equipment and other raw materials saw a sharp uptick in purchase prices in June, which led to a renewed rise in cost burdens across the non-oil private sector,” IHS Markit economist David Owens said.
“As a result, wages were reduced for the third month in a row,” he said.
The reading for the employment sub-index weakened to 44.6 from 45.5. New export orders fell for a ninth month in a row, IHS Markit said.