Cairo – Mubasher: Egypt's non-oil private sector contracted at its lowest pace in a year in July as key parts of the economy such as tourism and hospitality started to reopen.

The seasonally adjusted IHS Markit Egypt Purchasing Managers’ Index increased to 49.6 in July, compared to 44.6 in June, slightly down from the neutral 50.0, according to a report on Wednesday. A reading above 50 indicates expansion, while a reading below that signals contraction.

Output and new orders sub-indices recorded monthly expansions for the first time in 12 months, “after the series signalled the worst economic downturn in its nine-year history during the COVID-19 crisis,” David Owen, an economist at IHS Markit, said.

With the return of international flights, the number of tourists increased and export demand grew as well, boosting the activity of several companies.

“Egypt still has some way to go to return to pre-COVID levels of activity and demand though, with the recent upturns only mild overall,” Owen noted.

Employment continued to drop during July with “companies not replacing voluntary leavers.”

As for prices, higher purchasing costs led to increasing the overall input prices in July, as the inflation rate accelerated to its highest pace for nine months.

“The landscape for Egyptian businesses remains both competitive and daunting, but can be improved in the coming months should tourism and other sectors be given a boost," Owen pointed out.

The outlook for future activity was the strongest for about two-and-a-half years.