Private-sector activity sees softest decline since October: Egypt’s non-oil private sector contracted for the 29th consecutive month in April — but did so at its slowest pace in six months as a more stable exchange rate helped to alleviate inflationary pressures, according to S&P Global’s purchasing managers’ index (pdf). The index rose to 47.3 in April from 46.7 in March, remaining below the 50.0 mark that separates growth from contraction.

What they said: “The latest PMI figures for Egypt provided some promising hints for the direction of the non-oil economy, particularly on inflation,” said David Owen, senior economist at S&P Global Market Intelligence. “Relative calmness in currency markets led to reduced pressure on import prices, culminating in the softest rise in purchase costs for a year and one that was weaker than the trend rate. The slowdown encouraged firms to raise their own charges to a lesser extent, which helped to partly alleviate the downturn in sales.”

Could inflation finally start to cool? Though high inflation continued to weigh on activity and demand, businesses recorded the softest decline in output in four months and the softest decline in new orders in six months. “The findings suggest that headline inflation in Egypt should begin to soften over the coming months,” Owen said. Headline inflation hit 32.7% y-o-y in March, approaching July 2017’s record high of 33%. April inflation figures should be released this Wednesday, 10 May.

But pessimism remains high: The “high degree of uncertainty” over future economic conditions led businesses to report their weakest outlook for the year ahead in the series’ 11-year history.

The reading got coverage overseas:Reuters | Bloomberg.

FROM THE REGION-

Saudi Arabia’s PMI (pdf) rose to 59.6 in April from 58.7 in March, only slightly below its eight-year peak of 59.8 in February. Growth came on the back of rising tourism, consumer spending, and new business tied to major infrastructure projects.

The UAE’s PMI (pdf) also rose to 56.6 in April from 55.9 in March, just short of its post-pandemic peak. New orders increased rapidly as easing market conditions including slower inflation and rising demand led businesses to offer promotions in a bid to capture market share.

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