Egypt: PMI increases in July; conditions continue to deteriorate
August 3, 2022
The S&P Global Purchasing Managers’ Index—which measures business activity in the non-oil private sector—came in at 46.4 in July, up from June's 45.2. As such, the index moved marginally closer but still below the 50.0 no-change threshold—where it has been mired for the past 20 months—signaling a milder deterioration in business conditions compared to the previous month.
July’s mild improvement was chiefly due to a marginally softer contraction in new orders. That said, the decline was still sharp, amid high price pressures and reduced client spending. As a result, firms scaled back output but at a softer pace than in June. Additionally, production was also capped by continued raw material shortages, leading to a rise in the backlog of orders. With regard to prices, a strong U.S. greenback and supply chain backlogs stemming from the war in Ukraine and the pandemic continued to drive up input costs, as prices for fuel, food and raw materials all increased. That said, the rate of cost inflation began to ease, prompting a softer raise in output charges. Meanwhile, eight consecutive months of job shedding ended in July, when employment levels stabilized. Lastly, business sentiment dropped sharply to one of the weakest in the series’ history.
Author: Marta Casanovas , Economist