Cairo – Mubasher: Increasing demand and growing fears over further price increases triggered a record expansion in purchasing activity among Egyptian companies in August.

The seasonally adjusted IHS Markit Egypt Purchasing Managers’ Index (PMI) increased to 49.8 in August, compared to 49.1 in July, slightly down from the neutral 50.0, according to a report on Sunday. A reading above 50 indicates expansion, while a reading below that signals contraction.

Egypt's non-oil private sector purchasing activity grew for the first time in nine months during August and at the fastest pace since the series started in April 2011.

"Whilst still in contraction territory, the PMI masked renewed upticks in output and new orders in August to suggest that businesses had taken further steps to recover from the COVID-19 pandemic."

As travel reopened, the number of tourists increased and the market activity saw a rebound. Meanwhile, employment rose for the second month in a row. 

"However, PMI data also showed the widespread risk of inflation, as input prices picked up at the fastest rate since August 2019. Selling prices were raised to the greatest extent in three years, while firms also sought to create buffer stocks amid fears that costs will continue to increase," David Owen, an economist at IHS Markit, said.

As the economy is in the second phase of recovery from the pandemic, more than half of all surveyed companies expected output to increase over the coming 12 months on the back of expected increases in demand and capacity.