{"id":643187,"date":"2024-09-04T00:00:00","date_gmt":"2024-09-04T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2024\/09\/04\/non-oil-private-sector-activity-grows-after-three-years-in-contraction-2\/"},"modified":"2024-09-04T00:00:00","modified_gmt":"2024-09-04T00:00:00","slug":"non-oil-private-sector-activity-grows-after-three-years-in-contraction-2","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2024\/09\/04\/non-oil-private-sector-activity-grows-after-three-years-in-contraction-2\/","title":{"rendered":"Non-oil private sector activity grows after three years in contraction"},"content":{"rendered":"

Finally in the green: <\/strong>Non-oil private sector activity expanded in August for the first time in over three years, S&P Global\u2019s E<\/a>gypt Purchasing Manag<\/a>ers\u2019 Index (PMI) (pdf)<\/a> report showed. The report pointed to more stable demand conditions thanks to \u201cmarket recovery amid improved macro-economic factors and rising export business\u201d as an important reason behind activity finally increasing.<\/p>\n

It\u2019s been a long time coming: <\/strong>The index rose to 50.4 in August, up from 49.7 in July<\/a>. The country\u2019s non-oil private sector has been in contraction since November 2020, but has been flirting with the 50.0 mark that separates growth from contraction since May<\/a> thanks to cooling inflation and growing confidence. <\/p>\n

Growth across the board \u2014 almost: <\/strong>Demand stability reports encouraged companies to increase their output, expand their inventories, and hire more staff for the second consecutive month. However, weakening client demand resulted in a marginal decline in new orders.<\/p>\n

But don\u2019t celebrate yet, inflationary pressures persist: <\/strong>The EGP weakening against the greenback last month pushed input price inflation up for the third consecutive month. The report also pointed to an increase in transport cost \u2014 thanks to the latest fuel price hike<\/a> \u2014 and a rise in salaries, explaining that \u201cefforts to pass through higher costs to customers also resulted in an increase in average prices charged.\u201d <\/p>\n

\u201cRising price pressures are another risk<\/strong> \u2014 August data signaled the fastest uplifts in costs and charges for five months \u2014 which has the potential to limit spending and weaken the market recovery,\" S&P Global Market Intelligence Senior Economist David Owen noted. <\/p>\n

Business sentiment rises to its highest level in years: <\/strong>Businesses had high expectations \u2014 their highest since mid-2022 \u2014 for future business activity last month. <\/p>\n

The news is bolstering growth projections for the country<\/strong>:<\/strong> \u201cEconomic growth bottomed out at 2.2% in 3Q FY 2023-2024,\u201d Fitch Solutions' director of MENA country risk Ramona Moubarak wrote<\/a>, reaffirming the Madbouly government\u2019s growth forecast of 4.2%<\/a> for the current fiscal year. She pointed to \u201chigher investment, a recovery in the manufacturing sector and a normalization of traffic through the Suez Canal (assuming the war in Gaza ends in H2 2024),\u201d behind her forecast and explained that the high cost of living and issues with the oil and gas sector will prevent the economy from growing even further. <\/p>\n

The international press also took note: <\/strong>Reuters<\/a> | Bloomberg<\/a> <\/p>\n

ELSEWHERE IN THE REGION- <\/strong><\/p>\n