Some positive signs for the private sector as PMI rises for second month running: The contraction in Egypt’s non-oil private sector slowed to its softest pace since February 2022 in May as inflationary pressures eased, according to S&P Global’s purchasing managers’ index(pdf). The country’s PMI rose to 47.8 in May from 47.3 in April, marking a second consecutive month of improvement but remaining below the 50.0 mark that separates growth from contraction. This is the 30th consecutive month that non-oil private-sector activity has been in decline.

Softer price hikes helped the picture: “The Egypt PMI remained in negative territory in May, but showed further promise that current economic headwinds were beginning to dissipate,” said David Owen, senior economist at S&P Global Market Intelligence. “Companies signaled that input cost pressures were again much softer than at the beginning of the year, as a period of stabilization in the EGP versus the USD 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.”

REMEMBER- Annual urban inflation eased to 30.6% y-o-y in Aprilfrom 32.7% the month before as a result of a favorable base effect, the stabilization of the EGP-USD exchange rate, and a slight slowdown in food price growth. Capmas and the central bank should be out with May’s inflation data on 8 June.

Demand conditions on the up? Output levels continued to decline but at their softest rate since theend of 2021, while new orders dropped at their slowest rate in seven months. Business activity came close to stabilizing in the manufacturing and services sectors. "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,” Owen said.

Yes, but:

  • Confidence remained near the all-time low recorded in April, with only 6% of the survey respondents expecting an increase in output over the next 12 months.
  • Employers cut jobs for a sixth consecutive month amid low sales figures and low liquidity to pay employees.
  • The purchasing power of firms continued to decline due to rising input prices and slow demand, resulting in a further depletion of input inventories.

The reading got coverage overseas:Reuters.

FROM THE REGION-

Rapid expansion of Saudi private-sector continues: Saudi Arabia’s PMI (pdf) dropped to 58.5 in May from 59.6 in April but remained in rapid expansion, with firms reporting strong increases in demand, output and employment.

Optimism in UAE reaches 2.5-year high:The UAE’s PMI (pdf) eased to 55.5 in May from 56.6 in April. Business confidence reached its strongest level since October 2021 as strengthening demand and rising employment drove optimism.

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