The non-oil private sector is still contracting, but signs of stabilization are beginning to emerge. Egypt’s non-oil private sector activity contracted for the third consecutive month in November, edging up to 49.2 from 49.0 in October, according to S&P Global’s latest Purchasing Managers’ Index (PMI) report (pdf). The reading came as subdued customer demand and weaker new order inflows continued to weigh on business activity — though contraction eased to its mildest pace in three months.

This month’s reading saw the second consecutive month of improvement in PMI numbers and the highest reading since August, when non-oil private sector activity breached the 50.0 mark that separates growth from contraction for the first time in over three years.

Input price inflation slowed to a four-month low in November, with rising wages and material costs exerting less pressure than in previous months. A stronger USD continued to drive up costs for imported goods, but overall inflationary pressures softened, moderating the rise in purchase prices.

Manufacturing showed tentative signs of recovery, with modest growth in orders boosting output. However, this uptick was offset by continued contraction in construction, wholesale and retail, and services.

Employment fell for the first time in five months, registering the sharpest drop in headcount since February. S&P Global attributed the decline to firms’ hesitancy to replace voluntary leavers due to lower sales volumes and subdued confidence.

While the reading suggests that business conditions are edging closer to stabilization, firms reported one of the lowest levels of confidence seen in the survey’s history. Commenting on Egypt’s future outlook, senior economist at S&P Global Market Intelligence David Owen noted that “reductions in purchasing activity and employment hint that firms are not expecting capacity levels to be challenged too much in the months ahead.”

ELSEWHERE IN THE REGION-

  • Saudi Arabia’s PMI rose to 59.0 in November (pdf), up from 56.9 in October and marking the country’s highest reading for 16 months.
  • Kuwait’s PMI increased to 55.9 in November (pdf), up from 52.7 in October, the second biggest monthly jump since the survey began in the country in September 2018.
  • Qatar’s PMI inched up to 52.9 in November (pdf), up from 52.8 in October.
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