Egypt's non-oil sector returns to growth in July, PMI shows

Egypt's non-oil private sector activity expanded in August for the first time in well over three years, as demand stabilised and the economy improved, a survey showed on Tuesday.

The S&P Global Purchasing Managers' Index for Egypt improved to 50.4 in August from 49.7 in July, edging above the 50.0 threshold separating growth from contraction, the survey showed.

Egypt's non-oil private sector had been contracting every month since November 2020.

"The past three months of survey data has been broadly indicative of a stabilisation in demand conditions, with many firms commenting on a market recovery amid improved macro-economic factors and rising export business," S&P Global said.

"This stability led firms to increase their activity for the first time in three years in August, although the pace of expansion was only marginal."

Egypt in March signed an $8 billion financial support agreement with the International Monetary Fund that included allowing the market to determine the currency exchange rate and a sharp increase in interest rates.

"Notably, several of the PMI subindices signalled growth in August, with increases in output, employment and purchasing activity showing that firms were confident enough to expand their activity and capacity," S&P economist David Owen said.

The output subindex jumped to 50.4 in August from 49.2 in July, its highest reading since November 2020. The new orders sub-index remained in contraction, but just barely, edging up to 49.4 in August from 49.3.

"Business expectations were also up, adding to signs that firms are hopeful that economic conditions are set to be more stable," Owen said.

The future output subindex rebounded to 57.1 from 54.6 in July. In June the index had dropped to 50.4, its lowest level since the subindex was first added to the survey in April 2012.