Egypt’s PMI hit a three-year high in June, just below the growth threshold

Cairo – July 4, 2024: Egypt’s non-oil private sector is on the verge of emerging from recession, according to S&P Global’s latest PMI report for June 2024.

Closing the first half of 2024 on a high, the S&P Global Purchasing Managers’ Index for Egypt rose to 49.9 in June from 49.6 in May, reaching a 3-year high.

Although the indicator was just below the 50.0 threshold that separates growth from recession, S&P noted that “businesses appear to be moving toward a recovery” after 43 consecutive months in recession.

Stabilizing economic conditions, reduced price pressures and an improved demand outlook resulted in Egyptian non-oil private sector sales volumes on an upward trend for the first time since August 2021.

The new orders sub-index posted a 50.2-point gain, the highest since August 2021, with manufacturing and services sectors showing the most promising signs. S&P said non-oil companies attributed the gain to improving domestic and international market conditions.

However, the report highlighted recession in the construction, wholesale and retail sectors.

The production subindex fell at its slowest pace in almost three years, while input purchases rose for the first time since December 2021.

“While production levels continued to fall on average, they were also close to growth territory as business capacity was supported by fresh growth in input purchases. If we see further increases in sales and purchases in the second half of this year, firms should have the motivation and the need to increase their production,” said David Owen, senior economist at S&P Global Market Intelligence.

Employment rates in Egypt’s non-oil private sector were relatively stable in June, with some companies increasing staff to meet increased sales and demand, while others reported layoffs and failure to replace retired workers.

“This was seen alongside a decline in confidence in future activity and was only slightly positive – in fact the lowest on record – as firms remained uncertain about the economic outlook amid recent volatility in financial conditions,” the report said.

The S&P report comes just a day after the president swore in a new government, marking a wave of significant changes and 20 ministerial changes aimed at reaffirming the country’s commitment to economic reforms and a sustainable development agenda.