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(Reuters) –Egypt’s non-oil private sector kept shrinking at a subdued rate in August, while expectations for the future improved marginally, the S&P Global Egypt Purchasing Managers’ Index (PMI) showed on Tuesday.
The PMI index remained at 49.2 in August, unchanged from July yet still below the 50.0 threshold that separates growth from contraction.
Activity has shrunk for 33 consecutive months. The contractions were nonetheless the slowest since August 2021.
“Hopes that a market recovery will spread further across the non-oil sector underpinned an improvement in business confidence towards the year ahead in August, which rose to the highest level in five months,” S&P Global said.
The subindex for future output expectations edged up to 53.7 from 52.9 in July.
“Despite strengthening, the activity outlook was still among the lowest recorded in the series history. Only 9% of respondents were positive that output will grow over the coming year, while many still feared recessionary conditions,” it added.
The output subindex fell to 48.0 from 48.9 in July, while new orders slipped to 48.3 from 48.5.
S&P Global economist David Owen said the August PMI findings suggest that the non-oil private sector has somewhat stabilised in recent months after a prolonged period of contraction.
“However, a pick-up in inflationary pressures was also indicated by the August survey findings, with some firms noting that a faster increase in input costs had reduced overall activity,” he said.
“Comments from surveyed companies suggest that exchange rate problems and cost of living pressures will need to be fully addressed before the country can escape the detrimental effects of inflation which currently runs at a record high.”
Annual headline inflation in Egypt quickened to a new record high of 36.5% in July from a previous record of 35.7% in June, according to the state statistics agency, while core inflation eased slightly to 40.7% in July from a record 41% in June.