Egypt’s headline seasonal purchasing manager index (PMI) for the non-oil private sector declined to 49.1 in July, down from the 49.9 recorded in June, indicating a slight deterioration in the health of the sector’s performance, according to the IHS Markit report on Egypt that was released on Tuesday.
IHS Markit’s PMI is a composite index designed to give a single-figure snapshot of operating conditions in the non-oil private sector’s economy.
However, the report said that Egypt’s job market moved into expansion mode in July, with a rise in employment for the first time since October 2019.
In this respect, the report noted that companies — included in the report’s survey — highlighted efforts to boost business capacity after a renewed increase in new orders during June.
Moreover, this surge in new orders led a number of companies to boost staffing levels in July, which led to a rise in employment after experiencing backlogs for eight months.
David Owen, an economist at IHS Markit, said that employment growth across Egypt’s non-oil economy in July pointed to an improved confidence that the worst of the pandemic’s impact is over.
On the demand level, the report pointed out that it receded over the recent period, as some customers remained reluctant to spend amid the continued impact of the ongoing pandemic.
“Weaker demand conditions were linked by survey panellists to a drop-off in domestic spending, as clients remained hesitant due to the ongoing COVID-19 measures. On the flip side, businesses were helped by a sustained and solid increase in orders from foreign clients, as global economic conditions continued to improve,” the report explained.
It added that both output and new orders’ indices fell back below the 50 neutral mark in July for the seventh time in eight months after experiencing renewed expansions in June.
“That said, the rates of decline were less marked than those observed between March and May and during the first half of 2020,” the report noted
“Many businesses are now eager to boost capacity, particularly as an increase in new orders in June led to a modest pile-up of outstanding work in the latest survey period. That said, with the New Orders Index falling back into negative territory, it is clear that the economic recovery remains fragile and in need of further supportive measures to strengthen demand,” Owen added.
Meanwhile, the influence of rising raw material prices, fuel costs, and employee wages on cost pressures lessened in July, driven by a decline in the rate of input price inflation to a four-month low.
For supply chains in the non-oil sector, the report said that it improved in July after seven successive months of declining vendor performance.