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Egypt’s May PMI marks highest level since February 2022

Egypt’s May PMI marks highest level since February 2022
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Cairo – Mubasher: The headline seasonally adjusted Purchasing Managers’ Index (PMI) of Egypt went up for the second month in a row to 47.8 in May 2023 from 47.3 last April.

The PMI reading, which remained below the 50 no-change mark, signalled the Arab Republic’s highest level since February 2022.

Non-oil private sector economy witnessed the softest downturn in business conditions during May for 15 months, according to the latest S&P Global PMI data.

Furthermore, new orders at non-oil businesses declined to a lesser extent, with the index picking up to its highest for seven months. Although firms continued to report subdued demand due to inflation, some respondents began to see a recovery in client orders.

The new business intakes in the services economy surged for the second time in three months, while the sales to foreign clients retreated at the softest rate in 2023 so far.

In spite of the registered improvement, confidence levels were still among the lowest ever recorded due to continued concerns about demand conditions, inflationary pressures, and supply-side challenges.  

As for business activity, the levels continued to fall in the latest survey period, reflecting the efforts of companies to cut output amid weaker sales volumes.

Employment cuts were also registered during May, marking the sixth successive month of job losses. 

Firms attributed the reduction to low sales and difficulties paying staff due to a lack of liquidity. The backlogs of work continued to decrease in spite of lower staffing capacity. 

David Owen, Senior Economist at S&P Global Market Intelligence, said: "The Egypt PMI remained in negative territory in May, but showed further promise that current economic headwinds were beginning to dissipate.”

Owen noted: “The headline index rose for the second month running to 47.8, while the two main sub-indices of output and new orders rose to their highest levels in 17 and seven months, respectively.”

"Companies signalled that input cost pressures were again much softer than at the beginning of the year, as a period of stabilisation in the Egyptian pound versus the US dollar helped to cool import markets. This led to another relatively soft rise in selling charges, providing some hope that consumer price inflation will fall again in May,” the economist highlighted.

He underlined: "Positivity in the services economy – where new business intakes rose for the second time in three months – suggests that demand could make further strides towards a recovery in the coming months.”

“Nevertheless, confidence levels remain broadly subdued, with just 6% of respondents expecting a rise in activity over the next 12 months. Although, this was still better than the survey-record low registered in April,” the official concluded.