By Lucy Adautin
Egypt’s non-oil private sector saw expansion in August for the first time in more than three years, as demand stabilized and the economy showed signs of improvement, according to a survey released on Tuesday.
The S&P Global Purchasing Managers’ Index for Egypt rose to 50.4 in August, up from 49.7 in July, surpassing the 50.0 mark that distinguishes growth from contraction, the survey indicated.
Since November 2020, Egypt’s non-oil private sector had been in a continuous state of contraction.
“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”.
In March, Egypt 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 Project Management Institute, 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.
Future output subindex climbed to 57.1 in August, up from 54.6 in July. In June, the index had fallen to 50.4, marking its lowest point since the subindex was introduced to the survey in April 2012.
