Egypt’s non-oil private sector PMI increases slightly to 49.1, purchasing activity expands: IHS

Doaa A.Moneim , Sunday 5 Sep 2021

IHS attributed such a rise to the increasing concerns over raw material prices and signs of a pick up in demand in the Egyptian market.

private sector

Egypt’s purchasing managers’ index™ (PMI) for non-oil private sector rose marginally to 49.8 in August, up from 49.1 in July and just shy of June's seven-month high, according to IHS Markit.

IHS’s PMI is a composite gauge designed to track the operating conditions in the non-oil private sector economy.

IHS attributed such a rise to the increasing concerns over raw material prices and signs of a pickup in demand in the Egyptian market.

This led to a record expansion in purchasing activity among Egyptian firms in August, according to the HIS.

As per the index, input prices rose at the quickest rate over two years, causing a sharp increase in output charges amid worries that escalating costs would affect firms’ profits negatively.

“Moreover, new order growth returned for the second time in three months, resulting in a slight increase in both output and employment alongside strong optimism that growth will be sustained over the coming year,” IHS explained.

August also witnessed renewed upticks in output, which suggests that businesses had taken further steps to recover from the COVID-19 pandemic and its associated repercussions, according to the index’s survey.

“Panelists widely pointed to a rebound in market activity and an increase in tourism numbers as travel reopened. As a result, employment levels rose for the second month running. That said, all three indices remained close to the 50 neutral threshold in August, suggesting that growth rates were only marginal. At the same time, input price inflation picked up to its highest level in exactly two years, which firms almost wholly related to rising commodity prices such as metals, timber and plastics. Higher prices correlated with the current global picture of supply shortages and delays linked to the pandemic and shipping,” IHS elaborated.

It also showed that Egyptian firms sought to build their input stocks in August amid fears that rising new orders and supply-side pressures would lead to further price hikes.

For purchasing activity, IHS said that it expanded in August for the first time in nine months and at the quickest pace since the series began in April 2011.

Furthermore, inventories declined in August for the first time in three months as firms used existing stocks in order to boost their output.

“With a second phase of economic recovery taking shape, over half of all surveyed firms projected output to grow over the next 12 months, linked to expected improvements in demand and capacity. As a result, the degree of positivity remained stronger than its long run trend for the fourth month running,” IHS expounded. 

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