{"id":548342,"date":"2022-08-04T03:58:10","date_gmt":"2022-08-04T03:58:10","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2022\/08\/04\/non-oil-business-activity-continues-to-fall-in-july-but-is-inflation-beginning-to-ease\/"},"modified":"2022-08-04T03:58:10","modified_gmt":"2022-08-04T03:58:10","slug":"non-oil-business-activity-continues-to-fall-in-july-but-is-inflation-beginning-to-ease","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2022\/08\/04\/non-oil-business-activity-continues-to-fall-in-july-but-is-inflation-beginning-to-ease\/","title":{"rendered":"Non-oil business activity continues to fall in July \u2014 but is inflation beginning to ease?"},"content":{"rendered":"

<\/a> Activity in Egypt\u2019s non-oil private sector continued to contract at a rapid <\/strong>pace in <\/strong>July<\/strong> as high inflation weighed on demand and output, according to the S&P Global purchasing managers\u2019 index (pdf)<\/a>. Business activity fell at a slightly slower pace during the month amid signs of softening inflation, though the reading was one of the weakest since the pandemic hit the economy in 2Q 2020. The index rose to 46.4 last month, up from a two-year low of 45.2 in June<\/a>, marking the biggest increase in the index in just over a year, though still below the 50.0 threshold that separates growth from contraction. This is the 20th consecutive month that activity in Egypt\u2019s private sector has declined..<\/p>\n

There\u2019s cause for optimism on inflation:<\/strong> July\u2019s PMI signaled \u201ca softer decline in the health of the non-oil economy,\u201d said S&P Global economist David Owen (My Morning Routine<\/a>). \u201cGood news was seen in inflation metrics, which dropped sharply at the start of the third quarter as fewer companies saw a rise in input costs,\u201d he said. Some 29% of companies reported rising input costs during the month, down from 45% in June, suggesting that the recent cooling of commodity prices<\/a> is having an impact on business costs.<\/p>\n

Headline inflation has risen to <\/strong>three-year highs<\/a><\/strong> this year<\/strong> as global headwinds spurred by the conflict in Ukraine and the pandemic have hit home, putting pressure on the EGP and causing food, energy and raw materials prices to surge. Inflation slowed for the first time in seven months<\/a> in June, though analysts expect it to pick up again in the coming months.<\/p>\n

Demand hit as firms pass costs to customers:<\/strong> Businesses continued to pass higher input costs onto consumers in July, hiking prices at the second-quickest rate in four years, according to the survey. This had knock-on effects on demand that saw output and new orders fall for another month, albeit at slower rates than in June when they hit their lowest levels since 2Q 2020.<\/p>\n

Businesses aren\u2019t feeling optimistic: <\/strong>Confidence fell to one of its weakest levels on record after rising to a five-month high in June. Only 13% of companies forecast output growth over the coming year.<\/p>\n

Also from the survey:<\/strong><\/p>\n