Egypt non-oil business drops to lowest level for two years

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• Non-oil private sector activity dropped to its lowest level in two years
• Businesses saw demand slump in the face of sharply rising prices
• Manufacturing and wholesale and retail sectors were badly hit

Non-oil private sector activity in Egypt dropped in June to its lowest level in two years as inflation, a weaker currency and shortages of materials bit into demand, a survey showed on Wednesday.

The S&P Global Egypt Purchasing Managers’ Index (PMI) weakened to 45.2 from May’s 47.0, well below the 50.0 threshold that separates growth from contraction. June was the PMI’s 19th month of contraction.

“The Egyptian non-oil economy saw its weakest performance in exactly two years in June, as businesses saw demand slump in the face of sharply rising prices, a devalued pound and material shortfalls,” S&P Global said.

“The reading was the lowest recorded since June 2020 during the first wave of the COVID-19 pandemic.”

The manufacturing and wholesale and retail sectors were particularly badly hit, S&P said.

Headline inflation rose to 13.5 percent in May from 13.1 percent in June.

The sub-index for overall input prices surged to 72.0 from 62.1 in May, while that for purchase costs rose to 70.9 from 62.3.

“Supply conditions also remained weak and added to inflationary pressures, as firms signalled that raw material supplies were becoming increasingly difficult to secure,” said S&P Global economist David Owen.

Output and new orders in June extended a contraction that has lasted nearly a year, with the output index, at 41.3, worsening from May’s 45 and the index for new orders dropping to 41.9 from 44.6.

The sub-index for future output expectations improved to 63.7, a five-month high, from 55.2 in May, when it was close to its lowest reading since the survey first included the category 10 years ago.