Business activity inches closer to growth: Egypt’s non-oil private sector activity picked up to its highest level in almost three years in May, with cooling inflation and growing confidence pushing it to the verge of growth, the S&P Global’s Egypt PurchasingManagers’ Index(pdf) showed.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

Growth territory? Almost there: The index rose to its highest level since August 2021 to 49.6, up from 47.4 in April and just shy of the 50 threshold that separates growth from contraction. Egypt’s PMI has been in contraction for 42 straight months.

Leading the improvement: “The output and new orders metrics closed most of their gaps to the 50.0 growth threshold, with the services and construction sectors even seeing a turnaround in activity as comments suggest that greater price stability fuelled client spending,” S&P’s Senior Economist David Owen noted.

Still reaping the rewards of the float: Improved foreign currency availability in the wake of hard currency inflows returning to the official banking system following the float of the EGP and FX and inflows from the Ras El Hekma agreement and international partners landing in the state coffers. This has spurred “greater price stability and stronger confidence” among firms and drove input cost inflation down for a third consecutive month.

More staff, better salaries. Improved confidence pushed companies to hire more. Meanwhile, higher cost-of-living pressures pushed businesses to raise salaries at one of the fastest rates in more than three years.

Recovery is yet to pick up across other sectors: “Ongoing downturns in industries such as manufacturing and wholesale & retail show that the recovery is still lopsided and may take more time to spread across the economy,” said Owen.

The story received coverage from: Bloomberg and Reuters.

Tags: